Bitcoin Privacy Tool 'CoinShuffle' Sees First Transaction

A type of anonymous transaction that bitcoin enthusiasts have been awaiting for years has finally been tested successfully on the network.

Sent on the bitcoin test network earlier this month, the transaction is the network's first implementation of CoinShuffle, a proposal that first generated excitement in April 2014 for building on existing privacy techniques in a way that doesn't rely on third parties.

On 15th August, developer Daniel Krawisz sent what he believes is the first transaction utilizing this tool on bitcoin.

Anyone can now experiment with the tool and run it on their own computers, but so far there's no way of bringing wallet users together to "Join" their transactions, or mix them together so they can be anonymized.

Created by researchers at Saarland University, CoinShuffle is an implementation of CoinJoin, a way of mixing multiple transactions in order to confuse the details of each.

CoinShuffle is unique because it uses CoinJoin without a third party mixing the transactions in an attempt to reduce trust.

There are several other privacy-minded bitcoin techniques and projects out there, such as Confidential Transactions or alternative cryptocurrencies like Zcash, but CoinJoin doesn't require changes to the bitcoin protocol, potentially making it a more practical way to bring about privacy than deeper protocol changes that could take a longer time to test and implement.

Some implementations of the transaction style have problems in the eyes of those who believe in decentralization.

Since mixing the transactions means gathering other transactions to mix them with, many applications require a third party to conduct the transactions.

While the first transaction is an achievement, there's still a ways to go for the project.