CISA and Privacy

CISA and Privacy

Original Postby 40000bytes

Posted on: May 5, 2024 13:13 UTC

The Bitcoin protocol significantly encourages the practice of batching, where multiple payments are made in one transaction to economize on fees and enhance efficiency.

This method, while economically beneficial, raises concerns regarding user privacy due to the potential exposure linked with combining multiple inputs. The introduction of the CISA (Confidential Information Sharing Agreement) slightly improves the efficiency of batching but does not substantially alter its privacy implications. It's important to note that when multiple inputs from the same owner are included in a transaction, privacy is compromised in the majority of instances. This can occur for various reasons, including the inclusion of unnecessary or mixed types of inputs, as well as the problematic use of "toxic change" as input.

CISA appears to discourage careful coin control by encouraging the use of more inputs per transaction. Despite this, it also lowers the costs associated with implementing coinjoin and payjoin protocols—two methods already in use that aim to bolster transaction privacy. Furthermore, CISA might decrease expenses related to other existing privacy-enhancing protocols, such as those involving Lightning Network (LN) channel closures with several in-flight Hash Time-Locked Contracts (HTLCs), as well as future proposed protocols. Although the reduction in costs is described as modest, it represents an important step towards favoring privacy within the Bitcoin ecosystem. This is particularly relevant given that coinjoin transactions currently constitute less than 10% of all Bitcoin transactions. The implication here is that even a small incentive, like a 5% cost reduction, could potentially increase the adoption of privacy-focused transactions among users.