After Coinswap Bitcoin Users Look To Tumblebit For Added Privacy And Fungibility
Online money transactions are yet to cross the threshold of complete privacy. Bitcoin users now have a new way to add to the privacy and fungibility of the cryptocurrency. TumbleBit is an innovation presented at the Milan conference on Bitcoin Scaling says a NASDAQ news brief. BTC transactions get added privacy and fungibility which is a step more than what we get using CoinSwap.
Inbuilt risk and vulnerability of the bitcoin
The risk in online BTC transaction arises from its traceability. These tainted bitcoins put the business at risk. The utility value of bitcoins as currency decreases when we consider this point. This reduces the privacy and fungibility of bitcoins as digital currency. One can trace the addresses to the point of payment and receipt in any transaction.
First Step to Better Privacy
In 2013, at the Bitcointalk forum, Peter Maxwell proposed CoinSwap as an improvement to the existing Blockchain network. What this developer proposed was this. You route your payments through an intermediary who accepts the bitcoins payment from the first party. Then, this intermediary sends the payment to the second party. You thus break the payment chain of the bitcoin and it becomes untraceable. Well, this is good, if the intermediary makes the payment.
This led to the next development for BTC users – in the form of Hash Time-Locked Contracts (HTLC). CoinSwap breaks the bitcoin link so no one can trace it. HTLC ensures payment takes place by linking the payment channel. If the second person gets a payment from an intermediary, then the intermediary can get a payment from the first person. No one can steal.
But, this also had its drawback. The intermediary could re-establish the link between the first and second person so that the entire transaction became visible to anyone on the internet.
Best Solution Through TumbleBit
So, TumbleBit arrived. Foteini Baldimtsi, Alessandra Sacfuro, Sharon Goldberg, and Ethan Heilman from the Boston University proposed this. Every user of the bitcoin interacted with one same intermediary. This person has the authority to make the payment if a person told him the correct answer to a puzzle.
These answers thus became the payment mode for bitcoins. One could sell the correct answer to anyone else. If they presented the answer to the intermediary, they could get the bitcoin. For his part, the intermediary does not know who sold the answer to whom. This improves the privacy and fungibility of the bitcoin.