Bitcoin Privacy BIPs¶

Implementation guide for Bitcoin privacy-enhancing BIPs in Anya Core.

Overview¶

This document covers the implementation and usage of Bitcoin Improvement Proposals (BIPs) that enhance privacy and fungibility in Bitcoin transactions.

Supported Privacy BIPs¶

BIP 341 - Taproot¶

Taproot improves privacy by making complex scripts indistinguishable from simple payments.

use bitcoin::{Address, Network, PrivateKey, Txid};
use bitcoin::blockdata::script::Script;
use bitcoin::util::taproot::{TapLeafHash, TapBranchHash, TaprootBuilder};

pub struct TaprootPrivacy {
    network: Network,
}

impl TaprootPrivacy {
    pub fn create_taproot_address(&self, internal_key: &PrivateKey, scripts: Vec<Script>) -> Address {
        let secp = bitcoin::secp256k1::Secp256k1::new();
        let internal_pubkey = internal_key.public_key(&secp).inner;

        let mut builder = TaprootBuilder::new();

        // Add scripts to the Merkle tree
        for script in scripts {
            builder = builder.add_leaf(0, script).expect("Valid script");
        }

        let spend_info = builder.finalize(&secp, internal_pubkey)
            .expect("Valid taproot construction");

        Address::p2tr(&secp, internal_pubkey, spend_info.merkle_root(), self.network)
    }

    pub fn key_path_spend(&self, private_key: &PrivateKey) -> TaprootKeySpend {
        // Key path spending - most private option
        TaprootKeySpend {
            private_key: private_key.clone(),
            witness_stack: vec![], // Empty witness for key path
        }
    }
}

BIP 340 - Schnorr Signatures¶

Schnorr signatures enable signature aggregation and improved privacy.

use bitcoin::secp256k1::{schnorr, Secp256k1, KeyPair, Message};

pub struct SchnorrPrivacy {
    secp: Secp256k1<bitcoin::secp256k1::All>,
}

impl SchnorrPrivacy {
    pub fn aggregate_signatures(&self, keypairs: &[KeyPair], message: &Message) -> schnorr::Signature {
        // Simple aggregation example (production should use proper MuSig2)
        let mut aggregated_key = keypairs[0];

        for keypair in &keypairs[1..] {
            // In practice, use proper key aggregation
            aggregated_key = self.combine_keypairs(&aggregated_key, keypair);
        }

        self.secp.sign_schnorr(message, &aggregated_key)
    }

    fn combine_keypairs(&self, kp1: &KeyPair, kp2: &KeyPair) -> KeyPair {
        // Simplified combination - use proper MuSig2 in production
        // This is just for demonstration
        *kp1
    }
}

BIP 47 - Reusable Payment Codes¶

Payment codes enable private, reusable addresses without address reuse.

use bitcoin::util::bip32::{ExtendedPrivKey, ExtendedPubKey, DerivationPath};

pub struct PaymentCode {
    version: u8,
    features: u8,
    pub_key: [u8; 33],
    chain_code: [u8; 32],
}

impl PaymentCode {
    pub fn new(extended_key: &ExtendedPubKey) -> Self {
        Self {
            version: 1,
            features: 0,
            pub_key: extended_key.public_key.serialize(),
            chain_code: extended_key.chain_code.as_bytes().clone(),
        }
    }

    pub fn derive_payment_address(&self, sender_key: &ExtendedPrivKey, index: u32) -> Address {
        // BIP 47 address derivation
        let shared_secret = self.generate_shared_secret(sender_key);
        let payment_key = self.derive_payment_key(&shared_secret, index);

        Address::p2wpkh(&payment_key, Network::Bitcoin).unwrap()
    }

    fn generate_shared_secret(&self, sender_key: &ExtendedPrivKey) -> [u8; 32] {
        // ECDH shared secret generation
        let secp = Secp256k1::new();
        let sender_pubkey = ExtendedPubKey::from_priv(&secp, sender_key);

        // Simplified ECDH - use proper implementation
        [0u8; 32] // Placeholder
    }
}

Privacy Techniques¶

CoinJoin Implementation¶

use std::collections::HashMap;

pub struct CoinJoinTransaction {
    inputs: Vec<CoinJoinInput>,
    outputs: Vec<CoinJoinOutput>,
    mixing_amount: u64,
}

impl CoinJoinTransaction {
    pub fn create_coinjoin(participants: &[Participant], amount: u64) -> Result<Self, CoinJoinError> {
        let mut transaction = CoinJoinTransaction {
            inputs: Vec::new(),
            outputs: Vec::new(),
            mixing_amount: amount,
        };

        // Validate all participants have the required amount
        for participant in participants {
            if participant.available_amount < amount {
                return Err(CoinJoinError::InsufficientFunds);
            }
        }

        // Create equal-value outputs
        for participant in participants {
            transaction.inputs.push(CoinJoinInput {
                participant_id: participant.id.clone(),
                utxo: participant.utxo.clone(),
                amount: participant.available_amount,
            });

            transaction.outputs.push(CoinJoinOutput {
                address: participant.output_address.clone(),
                amount,
            });

            // Add change output if needed
            if participant.available_amount > amount {
                transaction.outputs.push(CoinJoinOutput {
                    address: participant.change_address.clone(),
                    amount: participant.available_amount - amount,
                });
            }
        }

        Ok(transaction)
    }
}

Stealth Addresses¶

pub struct StealthAddress {
    version: u8,
    options: u8,
    scan_pubkey: bitcoin::PublicKey,
    spend_pubkey: bitcoin::PublicKey,
}

impl StealthAddress {
    pub fn generate_payment_address(&self, ephemeral_key: &PrivateKey) -> Address {
        let secp = Secp256k1::new();

        // Generate shared secret
        let shared_secret = self.generate_shared_secret(&ephemeral_key.public_key(&secp));

        // Derive payment public key
        let payment_pubkey = self.derive_payment_pubkey(&shared_secret);

        Address::p2wpkh(&payment_pubkey, Network::Bitcoin).unwrap()
    }

    fn generate_shared_secret(&self, ephemeral_pubkey: &bitcoin::PublicKey) -> [u8; 32] {
        // ECDH between ephemeral key and scan key
        let secp = Secp256k1::new();
        // Simplified implementation
        [0u8; 32]
    }

    fn derive_payment_pubkey(&self, shared_secret: &[u8; 32]) -> bitcoin::PublicKey {
        // Derive payment key from shared secret and spend key
        self.spend_pubkey // Simplified
    }
}

Privacy Best Practices¶

Address Management¶

pub struct PrivacyWallet {
    hd_wallet: HDWallet,
    used_addresses: HashSet<Address>,
    gap_limit: u32,
}

impl PrivacyWallet {
    pub fn get_fresh_address(&mut self) -> Address {
        loop {
            let address = self.hd_wallet.derive_next_address();
            if !self.used_addresses.contains(&address) {
                return address;
            }
        }
    }

    pub fn get_change_address(&mut self) -> Address {
        // Always use fresh addresses for change
        self.hd_wallet.derive_change_address()
    }

    pub fn consolidate_utxos_privately(&self, utxos: &[UTXO]) -> Transaction {
        // Use CoinJoin or similar privacy technique for consolidation
        self.create_private_consolidation_tx(utxos)
    }
}

Transaction Privacy¶

pub struct PrivateTransactionBuilder {
    dust_threshold: u64,
    fee_rate: f64,
}

impl PrivateTransactionBuilder {
    pub fn build_private_transaction(&self, inputs: &[UTXO], outputs: &[TxOutput]) -> Transaction {
        let mut tx_builder = TransactionBuilder::new();

        // Add inputs with random order
        let mut shuffled_inputs = inputs.to_vec();
        shuffled_inputs.shuffle(&mut thread_rng());

        for input in shuffled_inputs {
            tx_builder = tx_builder.add_input(input);
        }

        // Add outputs with random order
        let mut shuffled_outputs = outputs.to_vec();
        shuffled_outputs.shuffle(&mut thread_rng());

        for output in shuffled_outputs {
            tx_builder = tx_builder.add_output(output);
        }

        // Use appropriate fee for privacy (not too low, not too high)
        let fee = self.calculate_privacy_preserving_fee(&tx_builder);
        tx_builder.fee(fee).build()
    }

    fn calculate_privacy_preserving_fee(&self, builder: &TransactionBuilder) -> u64 {
        let size = builder.estimate_size();
        let base_fee = (size as f64 * self.fee_rate) as u64;

        // Add randomness to avoid fee fingerprinting
        let variance = (base_fee as f64 * 0.1) as u64;
        let random_adjustment = thread_rng().gen_range(0..variance);

        base_fee + random_adjustment
    }
}

Privacy Analysis Tools¶

Transaction Analysis¶

pub struct PrivacyAnalyzer {
    address_reuse_detector: AddressReuseDetector,
    timing_analyzer: TimingAnalyzer,
    amount_analyzer: AmountAnalyzer,
}

impl PrivacyAnalyzer {
    pub fn analyze_transaction_privacy(&self, tx: &Transaction) -> PrivacyReport {
        let mut report = PrivacyReport::new();

        // Check for address reuse
        report.address_reuse_score = self.address_reuse_detector.analyze(tx);

        // Analyze timing patterns
        report.timing_score = self.timing_analyzer.analyze(tx);

        // Analyze amount patterns
        report.amount_score = self.amount_analyzer.analyze(tx);

        // Calculate overall privacy score
        report.overall_score = self.calculate_overall_score(&report);

        report
    }

    fn calculate_overall_score(&self, report: &PrivacyReport) -> f64 {
        (report.address_reuse_score + report.timing_score + report.amount_score) / 3.0
    }
}

pub struct PrivacyReport {
    pub address_reuse_score: f64,
    pub timing_score: f64,
    pub amount_score: f64,
    pub overall_score: f64,
    pub recommendations: Vec<PrivacyRecommendation>,
}

Configuration¶

Privacy Settings¶

privacy:
  enabled: true

  address_management:
    gap_limit: 20
    never_reuse_addresses: true
    auto_generate_change: true

  transaction_privacy:
    randomize_input_order: true
    randomize_output_order: true
    fee_randomization: 0.1  # 10% variance

  coinjoin:
    enabled: true
    min_participants: 3
    max_participants: 20
    mixing_amounts: [100000, 1000000, 10000000]  # satoshis

  taproot:
    prefer_key_path: true
    script_tree_depth: 3

  tor:
    enabled: true
    control_port: 9051
    socks_port: 9050

Testing Privacy Features¶

#[cfg(test)]
mod privacy_tests {
    use super::*;

    #[test]
    fn test_taproot_privacy() {
        let taproot = TaprootPrivacy::new(Network::Testnet);
        let private_key = PrivateKey::generate(&mut thread_rng());

        let scripts = vec![
            Script::new_p2wpkh(&private_key.public_key(&Secp256k1::new()).wpubkey_hash().unwrap()),
        ];

        let address = taproot.create_taproot_address(&private_key, scripts);
        assert!(address.is_valid());
    }

    #[test]
    fn test_coinjoin_creation() {
        let participants = create_test_participants(5);
        let coinjoin = CoinJoinTransaction::create_coinjoin(&participants, 100000);

        assert!(coinjoin.is_ok());
        let tx = coinjoin.unwrap();
        assert_eq!(tx.inputs.len(), 5);
        assert!(tx.outputs.len() >= 5); // At least one output per participant
    }
}

Monitoring and Metrics¶

Privacy Metrics¶

pub struct PrivacyMetrics {
    pub transactions_analyzed: u64,
    pub average_privacy_score: f64,
    pub taproot_adoption: f64,
    pub address_reuse_rate: f64,
    pub coinjoin_participation: u64,
}

impl PrivacyMetrics {
    pub fn generate_report(&self) -> PrivacyMetricsReport {
        PrivacyMetricsReport {
            period: "24h".to_string(),
            metrics: self.clone(),
            recommendations: self.generate_recommendations(),
        }
    }

    fn generate_recommendations(&self) -> Vec<String> {
        let mut recommendations = Vec::new();

        if self.address_reuse_rate > 0.1 {
            recommendations.push("Consider implementing stricter address reuse prevention".to_string());
        }

        if self.taproot_adoption < 0.5 {
            recommendations.push("Increase Taproot adoption for better privacy".to_string());
        }

        recommendations
    }
}

See Also¶

• Security Policy
• Encryption Guidelines
• Bitcoin Integration
• Privacy Measures

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This documentation is part of the Anya Core privacy implementation guide.