Confidential Transactions: How Hiding Transaction Amounts Increases Bitcoin Privacy

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Bitcoin right now is not unequivocally anonymous. While Bitcoin addresses aren’t indispensably related to real-world identities, they can be. Monitoring a unencrypted peer-to-peer network, research of a open blockchain, and Know Your Customer (KYC) process or Anti-Money Laundering (AML) law can exhibit a lot about who’s regulating Bitcoin, and for what.

This is not good from a remoteness perspective. Bitcoin users competence not indispensably wish a universe to know where they spend their money, what they acquire or how many they own, while businesses might not wish to trickle transaction sum to competitors – to name some examples. 

Additionally, bitcoins being traceable, presumably “tainted,” and potentially value reduction than other bitcoins is during contingency with fungibility. This could even plea Bitcoin’s value tender as money.

But there are intensity solutions to boost privacy, and urge fungibility. 

One of these solutions is “Confidential Transactions.”

Background

As against to many digital financial infrastructure, all standard Bitcoin exchange are available on a open blockchain, manifest for anyone to see. This is compulsory to countenance exchange though any centralized authority, though also creates it pardonable to snippet how many bitcoins are sent from that addresses to that addresses.

To raise privacy, it is probable to censor a volume of


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