Wasabi Bitcoin Wallet Announces Version 2.0 With More Privacy

Bitcoin privacy company zkSNACKs has announced a major upgrade to its Bitcoin wallet, Wasabi Wallet. 

In a blog post, the company promises that Wasabi Wallet 2.0 will improve upon the user interface and design of the original service. What’s more, it says, the upgrade will shore up security measures with a new anonymous credential scheme called WabiSabi.

The original Wasabi Wallet is a type of privacy-focused Bitcoin “mixer” aimed at making individual Bitcoin transactions more secure with CoinJoins—processes that join multiple coins (from multiple people) into a single transaction. By jumbling up the inputs and outputs, it can obscure identifying information from prying eyes.

As a non-custodial wallet, Wasabi doesn’t actually hold any assets, working instead as a pure coordinator through Tor—a network that prioritizes security and anonymity by concealing users’ IP addresses

Wasabi Wallet 2.0 operates in much the same way, says zkSNACKs, but with a few important upgrades. For starters, manual CoinJoins, the company claims, “will be a thing of the past, or for power users only”—implying that the process will now be automated.

On the privacy front, the star of the show is WabiSabi, a new CoinJoin algorithm that zkSNACKs is saying “will facilitate faster, more cost-efficient collaborative transactions without waste, lay the foundation for payments within CoinJoins, and open the door for combinations with other technologies.” 

What exactly those technologies could involve isn’t yet known, but the WabiSabi white paper notes that the protocol does away with blind signatures—a cryptographic concept that sacrifices a degree of privacy and flexibility, according to zkSNACKs.

Over email, Wasabi marketing strategist Riccardo Masutti elaborated on the possibility of payments within CoinJoins. “Payments from CoinJoin transactions are possible, as are payments within them,” he wrote. “Effectively a multiparty PayJoin that trades the steganographic properties for improved privacy from counterparties or even open a Lightning Network channel from a CoinJoin transaction.”

A PayJoin is a type of CoinJoin that disguises its typical input/output signature, making it difficult to recognize it as such. Which is to say transactions through Wasabi could become a lot faster, and a lot more secure.

CoinJoins via the current release of Wasabi Wallet are limited in that they require each peer to contribute a set amount of Bitcoin, which then yield equal payouts; with WabiSabi, users can theoretically contribute whatever amount they want, irrespective of what their peers are spending.

CoinJoins have become a popular way to ensure privacy on the Bitcoin blockchain, for transactions both malicious and not. This past summer’s Twitter hack relied on CoinJoins via Wasabi to mask transaction trails, as did September’s KuCoin hack. 

Masutti told Decrypt that while the system can be used to commit crimes, he sees it purely as a means to improving the privacy aspects of the Bitcoin blockchain, and says it’s “not intended for criminals to launder money.” “There is no good money without privacy,” said Masutti. “We strongly believe that the positive sides outweighs by far the use of it for malicious activity [sic].”

But there are also plenty of regular users attracted to Wasabi Wallet’s promise of privacy for privacy’s sake. In an article last year discussing Binance’s potential monitoring of CoinJoins through Wasabi, Decrypt cited one concerned Twitter user, @Bittlecat:

“I use wasabi wallet precisely because I dislike the thought of my transactions being watched. It is the same reason we close the toilet door when we do our business—not because we are doing anything illegal, but because we want privacy.” 

Editor's note: This article was updated after publication to include comments from Wasabi's Riccardo Masutti.