New OBPP Report Outlines Troubling State of Privacy in Bitcoin Wallets

Although Bitcoin has a reputation as a haven for criminals who
wish to transact online in an anonymous manner, it doesn’t appear
the currently available wallet options are very helpful for this
potential use case of the digital cash system. In their
second edition of the Bitcoin Wallet Privacy Rating

, released Sunday, the

Open Bitcoin Privacy Project

(OBPP) has painted a rather dismal picture of privacy in Bitcoin

The OBPP report says that many privacy-focused initiatives for
Bitcoin “stalled out” in 2015. In the introduction to the report,
OBPP contributor

writes, “Improvements are desperately needed to keep Bitcoin
independent and safe.”

Ledger Takes the Top Spot


can rejoice in the fact that it has created the most private
Bitcoin wallet on the market, the fact that it scored only 50 out
of 100 possible points should give every Bitcoin user pause. Ledger
has released a variety of
hardware devices

, which have been integrated into multiple third-party wallets, but
the OBPP’s report focused on the
Ledger Nano

and the company’s own wallet solution.

In the report, it is noted that Ledger’s Chrome extension-based
Bitcoin wallet does not contain advanced privacy features. In fact,
it doesn’t even store a local copy of the blockchain. Ledger’s
positive marks appear to have come from its ability to assist users
in avoiding

address reuse

and managing multiple accounts within the same wallet.

Coinbase Places Last Again


is the service that
placed last

in the OBPP’s original review of Bitcoin wallets in the spring of
last year, and the

-backed company has taken the bottom spot again in 2016. Of course,
it should be noted that Coinbase offers a variety of services that
make it difficult for them to provide high-levels of privacy to its
users. In fact, Coinbase CEO

recently wrote
a Medium post

 titled “Coinbase is not a wallet” about how the company
is more of a retail exchange than a wallet provider.

In the OBPP’s report, the custodial nature of Coinbase’s
consumer wallet is pointed out as a major flaw. Although Coinbase
is required to follow

(KYC) guidelines because it also handles fiat money, the report
claims some privacy improvements, such as discouraging address
reuse, can be made without disrupting the company’s KYC

Coinbase is able to offer mainstream users unique features, such
as USD balances, which make it easier for some individuals to
interact with Bitcoin as a payment system. Some will say it doesn’t
make sense to include Coinbase, which is essentially a Bitcoin
bank, in a report about wallets, but it’s important for users to be
aware of the privacy-related consequences of using this type of
custodial wallet.

Is Privacy in Bitcoin Dead?

This report from the Open Bitcoin Privacy Project will
definitely be an eye-opener for individuals who believe they can
use Bitcoin privately with a variety of wallets. Perhaps the most
troubling aspect of the report is that the world’s two most popular
Bitcoin wallets,

and Coinbase, both scored in the bottom four of all wallet

One of the only bright spots of the report is

, which is ranked sixth in Bitcoin wallet privacy. The report notes
a number of promised features that will eventually be integrated
into the relatively new wallet option and adds, “The wallet is off
to a strong start in 2015, and threatens to usurp

for the spotlight in 2016 as the defacto choice for privacy-minded

Kyle Torpey is a freelance journalist who has been following
Bitcoin since 2011. His work has been featured on VICE
Motherboard, Business Insider, NASDAQ, RT’s Keiser Report and
many other media outlets. You can follow


on Twitter.