How to send and receive Bitcoin privately

I recently published an article on Bitcoin as a human rights platform, discussing many of the human rights that Bitcoin helps protect. However, I couldn’t wrap my head around Bitcoin’s privacy. So I researched how to send and receive Bitcoin privately.

Everyone has the right to privacy, according to Article 12 of the Universal Declaration of Human Rights. However, when you send and receive Bitcoin onchain, this record is public. The party you are sending or receiving from can see your public address and can search the online block explorer to see how much Bitcoin is left in your wallet and other addresses you have interacted with.

Why is privacy important in Bitcoin transactions?

First, if you have a significant balance in your wallet, you don’t want anyone to find out because it exposes you to a $5 wrench attack. A $5 wrench attack occurs when someone discovers that you have a large stash of bitcoin and controls the keys to that stash. As a result, they physically attack or threaten you in exchange for your Bitcoin. You don’t want to be in a situation where it’s your life or your Bitcoin. As a result, it is in your best interest to keep your bitcoin private.

Second, it is common knowledge that companies have mined customer data and sold it among themselves for ad targeting and other purposes. Many people do not want third parties to know what they spend their money on, who they shop with or where they spend it. When using banks, payment service providers and e-commerce platforms, this is a difficult task because they are KYC’d and can benefit from this personal information.

So how do you trade Bitcoin privately?

Using Opendime is one of the easiest methods I’ve seen. Opendime allows you to load a predetermined amount of Bitcoin onto a physical flash drive that contains a private key. The recipient can pay another party by physically delivering the drive to them. To send Bitcoin to the blockchain, you must physically punch a hole in the device. The idea is that you can exchange the flash drive for a good or service, and the transaction will not be recorded on the public blockchain, making it similar to a cash transaction. If you lose the flash drive or damage it, your bitcoin is lost forever.

Another option is to use the Mercury wallet, which uses a statechain to send and receive bitcoin. The wallet supports a variety of bitcoin denominations, including 1000 Sats (Satoshis) and 10,000 Sats. So, when you deposit Bitcoin, you exchange it for a set of Sat denominations that you can send directly to other Mercury users. Nothing is recorded on the Bitcoin blockchain during the send transaction, which transfers signing rights to the recipient. This ensures the privacy of your transactions.

A simplified example would be writing a draft email and then saving it. You then send the login information to the recipient, who logs in and reads the draft. Any crawler tracking of sent emails will not be able to whiten the privacy of the message. With Mercury Wallet, the email app has no way to access the message in the draft, and it has a fail-safe protocol where if the app doesn’t work, the sender can always retrieve the message in the draft.

This method allows you to send and receive bitcoin privately, online, and eliminates the transaction costs that would otherwise be required for on-chain transactions.

Other strategies for achieving privacy when trading in bitcoin include the Wasabi wallet, which uses coinjoin functionality, and Bitcoin Laundry, which uses a mixer protocol where you put in bitcoin, mix it with other people’s coins, and then send out untraceable bitcoins from it same amount.

While trying to achieve privacy, be careful not to violate money laundering regulations in your jurisdiction.

Disclosure: I own bitcoin and other cryptocurrencies.