Wasabi together with Trezor for more privacy on Bitcoin

A few days ago Wasabi announced that the so-called coinjoin function is coming to Trezor. 

🚨 BREAKING: Hardware wallet coinjoins are coming next year with our friends at @Trezor pic.twitter.com/2RFCgM9wK2

— Wasabi Wallet (@wasabiwallet) September 4, 2022

Trezor and Wasabi collaboration for more secure Bitcoin

Trezor is by far one of the world’s largest manufacturers of hardware wallets for Bitcoin and cryptocurrencies, while Wasabi is by far one of the most widely used high-privacy crypto wallets. 

Indeed, Trezor is the company that invented hardware wallets for cryptocurrencies in 2011, at a time when people were just starting to trade them on early exchanges – the first exchange is from the previous year, 2010. 

It is therefore no coincidence that it always tries to stay ahead of the curve, not least when it comes to privacy. 

Wasabi on the other hand is one of the most widely used crypto wallets for those who want to maintain a high level of privacy, precisely because it has automated coinjoin that can be used freely and easily. 

What is CoinJoin

CoinJoin is a method of sending Bitcoin transactions that allows multiple transactions from different users to be combined together into a single transaction to be recorded on the blockchain, so that it is more difficult for those who see that single transaction on the blockchain to trace back all the original transactions from the various users that were combined upstream. 

The fact is that, unlike many other solutions for elevating the level of privacy, coinjoin transactions are fully compatible with the Bitcoin protocol, such that they are easily usable by any wallet that uses them

Hardware wallets tend not to allow the use of coinjoin, so thanks to this collaboration between Wasabi and Trezor it will finally be possible for hardware wallet owners to use this high-privacy technology as well. 

Trezor had already announced the future addition of coinjoin in April last year, and yesterday confirmed that they are already working on it. 

Hi, we’re working on a CoinJoin implementation, not an album. Thanks for understanding🤟

— Trezor (@Trezor) September 5, 2022

At this time it is not yet clear when these new features will be released, nor on which Trezor devices. It is also not clear how they will be usable, but it is possible to imagine that the procedure may be similar to the one adopted by Wasabi. 

However, Wasabi contributor Rafe revealed that Trezor Suite users will be able to send Bitcoin with a high level of privacy directly from their hardware wallets. This suggests that the integration provided by Wasabi will be implemented on Trezor Suite, which is the desktop app that enables the use of tokens stored in Trezor’s hardware wallet. 

Even now, on the home page of the Trezor Suite website there is generic talk of “improved security and privacy”, probably because the new features may already be on the way. Then again, it is possible that Trezor has also been working on it for more than a year. Indeed, according to Karo Zagorus of the zkSNACKs community, the first talks between Trezor and Wasabi would have started as early as 2019

According to Rafe‘s statement, it will be possible to participate in zkSNACKs rounds of WabiSabi coinjoins with Trezor’s hardware wallet through the Trezor Suite app. 

So it appears that, simply, Trezor Suite users will have the opportunity to be among the senders of transactions that are included in coinjoins created by Wasabi, which is to say that they collect and mix together transactions made by Wasabi users themselves. 

Moreover, Rafe again stated that the reason Trezor chose Wasabi coinjoins is because he considers it by far the most advanced CoinJoin protocol around. 

Indeed, it is worth mentioning that Wasabi’s wallet is by far one of the most widely used in the world by those who want to transact in Bitcoin with a high level of privacy.

Coinjoin and the case of Tornado Cash 

It remains to be seen how regulators will react after what happened with Tornado Cash. As a matter of fact even Tornado Cash is a mixer, i.e., it combines multiple transactions from different users into one so that the original transactions are difficult to trace. 

Actually, so far Wasabi does not seem to have had similar problems with law enforcement, despite being under observation by Europol since 2020. This suggests that his situation differs from Tornado Cash’s for some reason, perhaps because what Tornado Cash’s developer is accused of is not equally attributable to Wasabi’s developers. 

The accusation, which led to Alexey Pertsev‘s arrest, was that he made Tornado Cash precisely for the clear purpose of helping those who wanted to launder money, while as far as we know this accusation was never made for the developers of Wasabi. 

Interestingly, Bitcoin has always been accused both of being overly anonymous and of not being anonymous at all. The truth, as is often the case in such cases, lies in the middle, meaning that in itself simple Bitcoin transactions do not have a particularly high level of privacy. 

How does Lightning Network work

It is true that with Lightning Network, which does not record transactions on the public blockchain, the problem is largely solved, but LN is mostly used for transactions of little importance or value. Registering a transaction on Bitcoin‘s public blockchain not only makes it much more secure, but also makes it verifiable beyond a reasonable doubt. 

This is why on-chain solutions that aim to raise the level of privacy of Bitcoin continue to be successful even after the deployment of LN, especially by those who want to move significant amounts of money without having their transactions easily intercepted. 

In such cases, they do not use LN but prefer to write the transaction on the public blockchain, and this exposes a drastic lowering of the privacy level if the transaction is simple. 

Given that many users who hold significant amounts of Bitcoin keep them on hardware wallets, the integration of coinjoins on these could be a real demand coming from some of their users. 

Finally, it is worth mentioning that version 2.0 of Wasabi wallet was released just this year, in the last few months, which is perhaps why Trezor has only now decided to integrate coinjoins despite apparently having started interacting with Wasabi three years ago.