Privacy in Bitcoin Transactions: Exploring Confidential Transactions

I've been playing around with this new ring signature thing for a bigger project, and it’s called Confidential Transactions. It’s a pretty neat feature that keeps the amounts hidden from anyone except the people involved in the transaction.

Shouldn't this be under the altcoin section? 😂 But honestly, I’m intrigued. Some of it goes over my head, but it’s definitely worth a look. Kudos for stepping out of the BTC box!

This really sounds like a solid sidechain idea. Love how CT could change the data visibility game for Bitcoin. You get the public transaction info for integrity, but the private stuff stays private, and it doesn’t bloat the chain.

If this goes live, are we gonna see two types of Bitcoin on exchanges? Like standard BTC at one price and these privacy coins at a lower price? OP, would you risk putting your BTC through that sidechain?

Yeah, tracking taint goes against what money should be. Just moving funds to a sidechain and back doesn’t really mix things up if you can still trace the transactions.

I gotta say I’m impressed. Your decision to implement that ring signature method makes a lot more sense now.

I don’t think you realize how this makes CoinJoins and CoinSwaps way more private. You can join with anyone anytime, no need for matching values. CoinJoin protects metadata, but it lacks content privacy. CT fills that gap perfectly.

Is the exponent encrypted too? Can you explain how you handle amounts with different exponents?

This might sound a bit anti-privacy, but do you have a screenshot of the GUI for confidential transactions? I haven’t really looked into Elements yet.

There’s not much to see, honestly. You just have an address, send coins, and the amounts are hidden from view. It feels like using testnet. You can see more details in the CLI.

So addresses are made up of the blinded key and some public key flags. But wait, doesn’t this compromise privacy? It seems like it could be tracked.

Not really, it doesn’t show up on the network. Sure, it’s not perfect, but it’s a temporary solution and doesn’t mess with consensus. We can fix the blinding key situation later.

Most transactions will likely be under 42.9 BTC, so most will have exponent zero. But yeah, if you use a different exponent, it could stand out. Just a heads up for anyone using CT.

So, if it hides the amounts, does that mean CoinJoin is off the table? We can’t let transaction links between parties be visible even if the amounts are hidden.

The outputs look random, but you can still handle them like regular CoinJoin outputs. Just keep the output value and proof together. You can add fees together too.

I’m confused. CoinJoin rearranges inputs to keep output values the same. If input values are hidden, how does that work? I need time to wrap my head around this.

It does work! Inputs don’t need range proofs. The CoinJoin can mix inputs as long as they fit the sighash. Outputs can be summed and proven equal to inputs.

Inputs don’t carry an exponent. The exponent is for the range proof, not the values. Right now, changing the exponent is a config file thing.

Will this ever be part of Bitcoin core, or will it stick to sidechains? It sounds like a big innovation.

It adds real confidentiality now, but I’m curious what it’ll take to integrate it into core. It seems unlikely for now.