bitcoin-dev
Out-of-band transaction fees
Posted on: December 1, 2020 19:14 UTC
In a discussion about improving the privacy of Bitcoin, a participant acknowledges the centralization risk involved in distinguishing honest service providers.
Therefore, they decide not to pursue that approach and instead consider an alternative method involving paying someone to add their UTXO to a transaction for fees. The participant agrees with another member that the main goal should be to improve Bitcoin's blockchain layer privacy, regardless of whether standardized UTXO sizes are used or not. They acknowledge the success of other CoinJoin based protocols such as JoinMarket and SwapMarket, but argue that such protocols have some overheads and require more UTXOs and bigger transactions than necessary. Moreover, they assert that the privacy properties of unequal output size CoinJoins are not well understood, while evenly sized output CoinJoins lead to efficiency. In a speculative tone, the participant contemplates a scenario where Bitcoin becomes mainstream and transaction prices increase dramatically, making some protocols uneconomical and leading to the use of L2 technology. In this setting, having evenly sized UTXOs makes sense as it is cheap and simple. However, this approach only works when exact values are unimportant and requires fee hacks. Overall, the participant concludes that although their initial idea has too many regulatory risks, an arbitrary-amount scheme that provides strong assurances in an efficient manner could be explored further.