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

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

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

ValueShuffle certainly makes certain that no third get together (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 personal not solely to 3rd events but in addition to the opposite the members 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 a very good match is right.
Extra concretely, we will exploit two essential synergies.

1. If we’ve got Confidential Transactions, CoinJoins with totally different output quantities are out of the blue potential. This eliminates one of many main restrictions of CoinJoin in observe.
2. The mixture of CoinJoin and Confidential Transaction makes it potential to combine a number of funds as an alternative of merely mixing self-sends (if the payer moreover has a mechanism to get multiple potential handle of the payee). Consequently, you’ll be able to combine and pay together with your cash in a single transaction. That is significantly better than CoinJoins with out Confidential Transactions, the place you first must carry out a mixing transaction and solely after mixing you’ll be able to carry out an precise fee in a second transaction. Which means CoinJoining your funds will really be cheaper (when it comes to blockchain house and thus transaction charges) than performing funds particular person. This gives an excellent incentive for doing CoinJoins. That is outstanding as a result of privateness often comes at a price — however in a state of affairs the place Confidential Transactions are already accessible, CoinJoin comes with a reduction.

My speak at Scaling Bitcoin 2017 gives a extra detailed rationalization on some great benefits of combining CoinJoin and Confidential Transactions.