A Battle Between Bitcoin Wallets Has Big Implications for Privacy

 Bitcoin privacy wallet Samourai announced  last Thursday that its  primary competitor, Wasabi Wallet, is the target  of an ongoing network  attack.The blog post is the latest in a string of allegations Samourai has leveled against Wasabi since mid-July.The  attack, according to Samourai Wallet, resembles a Sybil attack,  where a  small number of users falsifies new identities and pretends to  be much  larger in number. This would mean that the anonymity set, or  crowd, in  which a user can hide their bitcoin transactions is not  actually as  large as Wasabi suggests.“As the Wasabi  team has described it, the goal of the Wasabi mixing  technique, is to  hide your [unspent transaction outputs] in a  ‘sufficiently’ large crowd  (peers),” Samourai wrote in its blog post.  “The current target  Anonymity Set in Wasabi mixing is 100 peers.”That  means that if, say, 20 of those peers are actually just one user  and  the identity of this user is uncovered, privacy levels for all  other  users in the same mixing pool are reduced.“With  bad user privacy, the crowd gets smaller,” independent bitcoin   researcher Max Hillebrand explained to CoinDesk. “If you are one of   these other [transactions] that have not been de-anonymized [by an   attacker] then your anonymity set is no longer 100.”Samourai says evidence of Sybil attacks on the Wasabi network dates back to January 2019.Wasabi has issued its own statements refuting Samourai’s claims, while also issuing allegations of their own against Samourai.As  a result, privacy-minded bitcoin users are questioning the true   efficacy of either wallet in hiding the identities of its users. 

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