This article explains a privacy-enhancing transaction tool called Stonewallx2. Developed by Samourai Wallet, this tool can be used to collaborate in cahoots transactions to create decoy bitcoin outputs.
When it comes to defensively guarding the privacy of Bitcoin users, Samourai Wallet has been on the bleeding edge for many years. Maintaining privacy while using Bitcoin requires paying close attention to the way that your transactions are being built; which inputs are being used and what kind of history your inputs are bringing with them. Common input ownership heuristics are used by chain analysis companies to surveil Bitcoin users. These heuristics make the assumption that when there are multiple inputs to a Bitcoin transaction, those inputs belong to the same entity. Techniques can be used to break these assumptions, thus rendering the ability of a chain analysis company to maintain such assumptions utterly indefensible.
One technique used in the fight for privacy is a tool brought to you by Samourai Wallet is called StonewallX2. When someone wants to enhance their privacy while sending bitcoin, they can choose to collaborate with another user to build a cahoots transaction, which will take multiple inputs from both parties and always produce four outputs. Two of the outputs will be identical in size, one is the actual spend to the third party and the other one is a decoy which is sent back to the collaborator. Then the other two outputs are the change returned to the two collaborating parties.
For example, if Bob wants to send Charlie 0.007 bitcoin, Bob can collaborate with Alice to build the transaction in a privacy-enhancing way. The transaction will have four outputs:
- Change to Alice
- Change to Bob
- Spend to Charlie
- Identical decoy spend returned to Alice
It is necessary for Alice and Bob to communicate the timing of their transaction out of band, meaning that in the example video below, Bob will have contacted Alice using a communication method outside of the…