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Privacy in Practice

4 min read

The Privacy Stack

Privacy is not one tool — it is a stack of practices at every layer. A privacy failure at any layer can undo gains at other layers.

Layer               Tool                    What it protects
─────────────────────────────────────────────────────────────
Acquisition         RoboSats / Hodl Hodl    No-KYC BTC
OS / Device         GrapheneOS              Mobile tracking
Wallet backend      Dojo / RoninDojo        Address discovery
On-chain mixing     Whirlpool (Samourai)    Transaction history
UTXO management     Coin control            Cross-contamination
Payments            Lightning               Small payment privacy
Identity            PayNym / BIP47          Address reuse

Step 1: Start No-KYC

The easiest privacy improvement is never creating the link between identity and Bitcoin address in the first place. See Buying Bitcoin for no-KYC options.

If you already have KYC Bitcoin, the next steps are more important.

Step 2: GrapheneOS

Before worrying about Bitcoin-specific privacy, your phone is the biggest tracking device you own. GrapheneOS is a hardened Android OS for Pixel phones:

  • Removes Google Play Services (replaced with sandboxed Google Play if needed)
  • Hardens the OS against exploitation
  • Per-app network and sensor permissions
  • Strong compartmentalization between apps

Setup: flash GrapheneOS on a supported Pixel phone. The guide covers the full process.

Step 3: Self-Hosted Node (Dojo / RoninDojo)

When your wallet queries a third-party server for your balance and transaction history, that server learns all your addresses. Solution: run your own node and connect your wallet to it.

Dojo: Samourai Wallet’s node backend. Series of 7 guides covering complete setup on x86 hardware.

RoninDojo: Dojo packaged for easier deployment. Includes:

  • Dojo (full node + indexer)
  • Electrum Rust Server (for other wallets)
  • Whirlpool GUI (for CoinJoin)
  • Whirlpool CLI (for automated mixing)

After setup, point your Samourai Wallet to your Dojo. Now the only server that knows your addresses is your own.

Step 4: Whirlpool CoinJoin

CoinJoin mixes your UTXOs with other users’, breaking the transaction history link. Whirlpool (Samourai Wallet) is the implementation covered in this library.

The process:

  1. Move funds into Samourai Wallet (connected to your Dojo)
  2. Enter a Whirlpool pool (100k / 1M / 5M / 50M sats)
  3. Your UTXOs are split into equal-value outputs and mixed with other participants
  4. Post-mix UTXOs have no traceable history back to pre-mix

Key concepts:

  • Toxic change: the unequal leftover from pool entry stays in “pre-mix” — treat it as unclean
  • Remixing: post-mix UTXOs participate in additional free mixes over time (more mixes = better privacy)
  • Spending post-mix: use post-mix UTXOs separately; don’t combine with pre-mix

Note: Samourai Wallet developers were arrested by the DOJ in April 2024. The wallet is still functional; the backend servers are being maintained by the community.

Step 5: PayNym / BIP47

Address reuse is a privacy leak: if you always receive to the same address, anyone can see your full incoming transaction history. PayNym (BIP47) solves this:

  • You publish a “payment code” (a kind of Bitcoin identity)
  • Senders derive unique one-time addresses from your payment code using ECDH
  • Each sender gets their own private address space
  • No one else can link your incoming transactions

Setup: Samourai Wallet supports PayNym natively.

Step 6: Coin Control

Manual selection of which UTXOs to use in transactions. Prevents:

  • Mixing KYC and no-KYC coins (which links the no-KYC address to your KYC identity)
  • Creating large combined UTXOs that reveal all coin sources

Best wallets for coin control: Sparrow Wallet, Electrum, Samourai Wallet.

The OXT Research Series

The OXT Research series (4 parts) explains blockchain analysis from the attacker’s perspective, so you can understand what you’re defending against:

  1. Fundamentals of blockchain analysis: what analysts do, what data they use
  2. Key concepts: CIOH (Common Input Ownership Heuristic), change detection methods
  3. Defenses: how CoinJoin and good UTXO hygiene defeat analysis
  4. Practical application: how to analyze your own transaction history

Understanding the attacker’s view is essential for meaningful privacy.

Lightning Privacy

Lightning Network payments are better for privacy than on-chain (payments aren’t broadcast publicly), but have their own issues. Key: use private (unannounced) channels where possible, and prefer Phoenix/Mutiny (which handle routing intelligently). See Lightning Tools for wallet options.

Sources

Synthesized from multiple sources in the 21ideas.org raw/ library. No single canonical source article.

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