confidential transactions – Is a privateness preserving coin mixer doable on Liquid?

Within the following I concentrate on Confidential Transactions (as an alternative of the extension Confidential Property) for simplicity, however all of what I say can also be true for Confidential Property.

Sure, it is doable to make use of cryptographic protocols to prepare the CoinJoin transaction in a privacy-preserving method. The ValueShuffle protocol is designed for precisely this function.

ValueShuffle certainly makes certain that no third occasion (e.g., a server facilitating the CoinJoin) learns the concerned quantities (or belongings). However its privateness ensures transcend this requirement: In a nutshell, ValueShuffle makes certain that the quantities of your inputs and output, and the connection between inputs and output stay non-public not solely to 3rd events but in addition to the opposite the contributors of the CoinJoin.

See the ValueShuffle paper for all the small print and limitations. Disclaimer: I am one of many authors.

Your instinct that CoinJoin and Confidential Transactions are match is right.
Extra concretely, we are able to exploit two necessary synergies.

1. If we’ve got Confidential Transactions, CoinJoins with totally different output quantities are out of the blue doable. This eliminates one of many main restrictions of CoinJoin in apply.
2. The mix of CoinJoin and Confidential Transaction makes it doable to combine a number of funds as an alternative of merely mixing self-sends (if the payer moreover has a mechanism to get a couple of doable tackle of the payee). In consequence, you possibly can combine and pay together with your cash in a single transaction. That is a lot better than CoinJoins with out Confidential Transactions, the place you first must carry out a mixing transaction and solely after mixing you possibly can carry out an precise cost in a second transaction. Because of this CoinJoining your funds will really be cheaper (by way of blockchain house and thus transaction charges) than performing funds particular person. This offers a fantastic incentive for doing CoinJoins. That is exceptional as a result of privateness often comes at a value — however in a state of affairs the place Confidential Transactions are already accessible, CoinJoin comes with a reduction.

My discuss at Scaling Bitcoin 2017 offers a extra detailed clarification on some great benefits of combining CoinJoin and Confidential Transactions.