Obfuscation in Bitcoin: Techniques and Politics
This addresses privacy challenges for Bitcoin users and regulators, offering insights into how obfuscation shapes the ecosystem, though it is incremental in mapping existing techniques.
The paper analyzes privacy techniques in Bitcoin, mapping 16 methods on an obfuscation-vs.-cryptography axis and finding that practical ones favor obfuscation, which helps balance privacy with regulatory acceptance.
In the cryptographic currency Bitcoin, all transactions are recorded in the blockchain - a public, global, and immutable ledger. Because transactions are public, Bitcoin and its users employ obfuscation to maintain a degree of financial privacy. Critically, and in contrast to typical uses of obfuscation, in Bitcoin obfuscation is not aimed against the system designer but is instead enabled by design. We map sixteen proposed privacy-preserving techniques for Bitcoin on an obfuscation-vs.-cryptography axis, and find that those that are used in practice tend toward obfuscation. We argue that this has led to a balance between privacy and regulatory acceptance.