The Bitcoin (BTC) ecosystem will soon lose an important privacy-enhancing service after zkSNACKs announced that it would discontinue its CoinJoin coordination service.
Max Hillebrand, CEO of zkSNACKs, spoke exclusively to Cointelegraph following the announcement and explained that the decision was made to ensure compliance with the latest legal and regulatory updates in the United States.
Hillebrand said the closure of the CoinJoin service was necessary given the lack of clarity in the U.S. over regulations pertaining to the cryptocurrency space and the use of privacy-enhancing tools.
Former NSA whistleblower Edward Snowden was among commentators who lamented the service’s discontinuation.
The zkSNACKs CEO said that the Bitcoin ecosystem was inevitably losing an important service that helped users transact with increased privacy through the coinjoin mechanism:
“Bitcoin privacy will survive, but cutting back the support from zkSNACKs for Bitcoin developers and privacy educators is a regrettable setback.”
Hillebrand also confirmed that Wasabi Wallet, the Bitcoin wallet developed by zkSNACKs that incorporated the CoinJoin service, will continue functioning as a regular BTC wallet. Users can generate private keys to receive and send Bitcoin.
Coinjoins offer complete privacy
Despite the closure of the CoinJoin service, Hillebrand said that Wasabi’s client-side filtering architecture, Tor integration and custom coin selection still provide significant privacy for users. However, the level of privacy afforded by CoinJoins remains unmatched going forward.
“The nature of the Bitcoin blockchain prevents users from obtaining complete privacy without CoinJoins,” Hillebrand conceded.
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The zkSNACKs CEO was hesitant to speculate whether similar crackdowns on privacy protocols and CoinJoin services would occur in jurisdictions outside the U.S.
The closure of zkSNACK's CoinJoin coordination service also affected products and services across the ecosystem. Hardware wallet services Trezor Suite and BTCPayServer will no longer be able to offer the service to its users from June 2024.
Cointelegraph has reached out to Trezor for comment on zkSNACKs' CoinJoin closure and whether it will consider using another Bitcoin privacy-enhancing service for its users.
How does CoinJoin work?
Hillebrand went into the details of zkSNACKs CoinJoin service during an in-depth interview with Cointelegraph at Bitcoin Amsterdam in 2023.
As Hillebrand explained, a CoinJoin service offers an effective method for obfuscating Bitcoin transactions by combining multiple inputs and outputs from several users into a single transaction, making it significantly harder for outside observers to determine specific transaction details.
Related: Trezor wallet enables Bitcoin privacy feature with CoinJoin
Wasabi Wallet was launched in 2018 following extensive research. The wallet uses Tor for anonymity, employs a light client approach for checking balances without compromising privacy, and utilizes block filters to efficiently and securely verify transactions without downloading the entire Bitcoin blockchain.
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