Cake Wallet The Chief Operating Officer warned that a single transaction could expose years of cautious Bitcoin activities.
This week on the Bitcoin Rails podcast, activists Seth, for, and Privacy discussed different ways to protect privacy when using Bitcoin, and stated that in the West, it is essential to value privacy.
Since the developer of the privacy coin mixer Samourai Wallet was tried last year and subsequently imprisoned, Bitcoin privacy has once again become a hot topic.
However, just this week, the U.S. Treasury Department canceled two long-delayed proposals for crypto regulation, bringing a major victory for privacy advocates and the digital asset industry.
Seth said, "If you spend your KYC tokens along with those that have KYC, and if you just let your wallet handle it automatically (which it might do since it doesn't know the difference between the two), you will immediately link all the KYC bitcoins you spent in that transaction to your identity." He was referring to UTXO management, which is also referred to by some wallets as " coin control ".
A Bitcoin wallet does not hold a single balance; instead, it holds a set of independent unspent transaction outputs, which are UTXO — each one being an independent “coin” that comes from a specific historical transaction.
When you send a payment amount greater than any single UTXO, the wallet will select multiple UTXOs and merge them into a single transaction input – as Seth points out, this can easily lead to errors.
Seth added that, compared to the Global South, whose peoples have experienced more oppressive state systems, citizens of Western countries need to "feel the pain" in order to realize how important privacy is.
However, he also stated that attitudes are changing, and people are becoming more serious about protecting privacy.
He said, "In the past five or six years, many people—even in the West—have begun to realize that privacy is truly important, and we now really need to seriously consider this issue."
Cake Wallet is a privacy-focused, self-hosted, open-source wallet. Earlier this year, the wallet integrated the Bitcoin Lightning Network into its platform.
Using this one- or two-layer solution is not only faster and cheaper, but it also provides more privacy than Bitcoin’s mainchain.
Although Cake Wallet supports other cryptocurrencies including the privacy coin Monero, Seth, for, and Privacy added that they actually wish such digital currencies did not exist.
He said, "If Bitcoin's privacy is good enough, and its privacy level is at least close to Monero without the need for a lot of cumbersome procedures, then it doesn't matter if Monero doesn't exist."
"I prefer for more people to have access to tools that offer better privacy, rather than more niche tools that may have perfect privacy features but are used by fewer people and are less well-known."
