zkSNACKs, the company behind the Bitcoin wallet Wasabi Wallet, has announced that it will be discontinuing its CoinJoin coordination service. This decision was made in order to comply with the latest legal and regulatory updates in the United States. Max Hillebrand, the CEO of zkSNACKs, stated that the lack of clarity in US regulations regarding privacy-enhancing tools in the cryptocurrency space made the closure of the CoinJoin service necessary. This announcement has drawn criticism from individuals such as Edward Snowden, who have praised the service for its privacy-enhancing capabilities.
Despite the discontinuation of the CoinJoin service, Hillebrand assured users that Wasabi Wallet will continue to function as a regular Bitcoin wallet. Users will still be able to generate private keys for sending and receiving Bitcoin. Hillebrand emphasized that even without CoinJoins, Wasabi Wallet’s client-side filtering architecture, Tor integration, and custom coin selection still provide significant privacy for users. However, the level of privacy offered by CoinJoins remains unmatched in the Bitcoin ecosystem.
Hillebrand admitted that the nature of the Bitcoin blockchain prevents users from achieving complete privacy without the use of CoinJoins. He also expressed uncertainty about whether other jurisdictions outside the US would implement similar crackdowns on privacy protocols and CoinJoin services.
The closure of zkSNACKs’ CoinJoin coordination service will also impact other products and services in the Bitcoin ecosystem. Trezor Suite and BTCPayServer, both hardware wallet services, will no longer be able to offer the CoinJoin service to their users starting from June 2024. Cointelegraph has reached out to Trezor for further comments on zkSNACKs’ decision and whether they will consider using another Bitcoin privacy-enhancing service for their users.
To understand how CoinJoin works, Hillebrand provided an in-depth explanation during an interview at the Bitcoin Amsterdam conference in 2023. He described CoinJoin as a method to obfuscate Bitcoin transactions by combining inputs and outputs from multiple users into a single transaction, making it difficult for outside observers to determine specific transaction details.
Wasabi Wallet was launched in 2018 after extensive research. It utilizes Tor for anonymity, employs a light client approach for balance checking without compromising privacy, and uses block filters to securely and efficiently verify transactions without downloading the entire Bitcoin blockchain.
In conclusion, the discontinuation of zkSNACKs’ CoinJoin coordination service will have an impact on the Bitcoin ecosystem, leaving users without the privacy-enhancing capabilities provided by CoinJoins.