\n
![](\"https:\/\/bitcoinmagazine.com\/.image\/c_fit%2Ch_800%2Cw_1200\/MjA5MDMyOTg5ODEwNjMyMzA0\/privacy---craig-raw---frank-corva---article-preview.png\")
<\/p>\n [ad_1]
\n<\/p>\n
This article is featured in Bitcoin Magazine’s “The Privacy Issue”. Subscribe<\/a> to receive your copy.<\/em><\/strong><\/p>\n When Craig Raw talks, you listen.<\/p>\n His deep voice has a gravity to it, bolstering the urgency of the points he makes.<\/p>\n It\u2019s like that voice in the back of your head that you hear when you\u2019ve left too much bitcoin on an exchange for too long. Or that voice that persists when your bitcoin stash isn\u2019t quite as secure as you know it could be.<\/p>\n It\u2019s an uncompromised voice, constantly reminding you to follow best practices when it comes to storing and using your bitcoin.<\/p>\n Weeks after interviewing Raw \u2014 creator of let Sparrow Wallet, a free and open-source Bitcoin desktop wallet beloved by Bitcoin enthusiasts worldwide \u2014 for this piece, both the tone of his voice as well as what he shared with me in our interview are still fresh in my mind.<\/p>\n He\u2019s concerned that the rhetoric around the importance of privacy and self-sovereignty as it pertains to Bitcoin is eroding and wants to remind you that both of these concepts are of the utmost importance as we move into an era where more and more bitcoin is KYC\u2019d and\/or held custodied within walled gardens (e.g., spot bitcoin ETFs).<\/p>\n So, if privacy and self-sovereignty mean something to you, please heed Raw\u2019s words. Learn from the tips he shares, highlighted in this piece, as well from simply using and (carefully) experimenting with Sparrow Wallet.<\/p>\n If you choose not to, you may end up experiencing a certain pain, which, while it may be a good teacher, would otherwise have been avoidable.<\/p>\n When it comes to storing and using your bitcoin privately, it\u2019s important to start with the basics, according to Raw.<\/p>\n \u201cThe first thing is to try and understand what Bitcoin is \u2014 to try and understand the UTXO model,\u201d Raw told Bitcoin Magazine<\/em>.<\/p>\n \u201cTry and understand the ways in which you can be more private without using any particular kinds of privacy tools,\u201d he added.<\/p>\n He went on to provide two examples of how to do this:<\/p>\n Example 1: Don\u2019t Reuse Addresses<\/strong><\/p>\n \u201cAddress reuse is unnecessary and generally is [a] very, very poor [practice],\u201d warned Raw. \u201cIt leads to transactions being correlated on-chain.\u201d<\/p>\n Example 2: Don\u2019t Use Rounded Amounts<\/strong><\/p>\n \u201cIf you create a transaction and your amount is a round number, then there\u2019s a change output and it\u2019s very easy to see which is which,\u201d he explained.<\/p>\n To expand on what Raw means in this second example, when you spend an uneven amount of bitcoin (e.g., 0.0010126 BTC), it\u2019s more difficult for someone watching the blockchain to decipher which UTXO is the payment and which is the change. This makes it more challenging for the observer to follow your UTXO into the future.<\/p>\n The inverse is true if you spend an even amount of bitcoin (e.g., 0.001 BTC). The observer can more easily intuit which UTXO is the payment and which is the change.<\/p>\n Both reusing addresses and using rounded amounts are \u201ccommon pitfalls that people don\u2019t necessarily consider,\u201d said Raw.<\/p>\n In addition to employing these two practices, you can use Sparrow Wallet to further increase their privacy.<\/p>\n \u201cSparrow offers two forms of transactions<\/em>,\u201d explained Raw. \u201cYou can either use the efficiency form<\/em>, which minimizes fees, or you can use the privacy form<\/em>, which constructs what we call a \u2018fake two person coinjoin.\u2019\u201d<\/p>\n Raw on Sparrow Wallet\u2019s privacy form transactions:<\/p>\n \u201cThe privacy form is a more complex transaction where it looks like you could have two people bringing funds into a transaction and then two outputs of the same amount. Anyone looking at that is looking at a transaction with more entropy, with more confusion in it. Even if you know that it’s a fake two-person coinjoin, you still have to follow both of those two outputs if you’re trying to follow a change of ownership flow in that transaction graph. So, that’s more expensive, but it’s a useful way to be able to create a more private transaction.\u201d<\/p>\n But what about those who don\u2019t want to bother with UTXO management? Isn\u2019t it just easier to use hardware wallet interfaces like Ledger Live or Trezor Suite that handle UTXO management for you?<\/p>\n Raw seemed unaffected as I played the role of devil\u2019s advocate in posing these two questions. He made the case in his gravelly voice that users sacrifice privacy, or their funds, when they neglect UTXO management.<\/p>\n \u201cYou can’t really abstract yourself away from the complexity of what Bitcoin is,\u201d posited Raw. \u201cIf you want to transact on Bitcoin, you\u2019re going to need to, at some stage, be aware of what you’re doing. Otherwise, you\u2019re likely to lose your funds or destroy whatever privacy you have.\u201d<\/p>\n He went on to share that wallets with simplistic interfaces that display your Bitcoin balance as if it were a bank account balance are doing a disservice to the user.<\/p>\n \u201cThe wallet is handling a lot of the detail for you underneath,\u201d shared Raw. \u201cAnd it simply doesn\u2019t know \u2014 it cannot know \u2014 the right decisions to make.\u201d<\/p>\n Raw then contextualized this statement, highlighting the fact that certain wallets don\u2019t know the right decisions to make IF<\/em> you\u2019re looking to preserve privacy in your transactions.<\/p>\n \u201cIf you received some funds from somewhere and then you spent those funds somewhere else, you are creating a cryptographic link on the chain which anyone can see,\u201d he explained. \u201cIf somebody knows the identity of either of those two sides, they can start to link things up. That is a dangerous thing that I don’t think people are aware of.\u201d<\/p>\n He likened this scenario to all of your text messages suddenly becoming public \u2014 with your name linked to them.<\/p>\n \u201cIt\u2019s like if we all had our chat apps and everybody could see everything everyone said and associate an identity to it,\u201d Raw explained. \u201cWhat we’re talking about is the same thing, but on a financial level.\u201d<\/p>\n Raw doesn\u2019t think most Bitcoin users are ready for this level of transparency.<\/p>\n He believes people should consider whether or not they\u2019re comfortable with publicly broadcasting information that can lead others inferring what they earn or with whom they transact. If they\u2019re not, then they might consider taking UTXO management more seriously with the help of Sparrow Wallet, which displays users\u2019 UTXOs by default instead of hiding them.<\/p>\n \u201cSparrow is trying to give users an ability to understand what it is that they are doing, to be more safe in their transactions from a security and privacy point of view by giving them the information that they need in order to be able to manage that kind of thing.\u201d<\/p>\n One of the most refreshing things about Raw is that he doesn\u2019t underestimate Bitcoin users. He seems to think of them as both capable and willing to learn, which is, in part, driven by the fact that we all value our privacy \u2014 whether we\u2019re conscious of it or not.<\/p>\n \u201cEven those who say, \u2018I don’t need to be private\u2019 [might change their mind] if they just spent a moment considering that they wouldn\u2019t like their bank accounts or their email inbox and so forth to be open to everyone in the world. And that is effectively what we have with an open blockchain,\u201d explained Raw.<\/p>\n \u201cI don’t think it is nearly well understood enough, even amongst Bitcoiners, exactly how open and transparent the blockchain is,\u201d he added.<\/p>\n \u201cThey may not have privacy from their bank or their government today, but they certainly have privacy from other individuals.\u201d<\/p>\n While neglecting UTXO management is a<\/em> threat to privacy, it\u2019s not the<\/em> threat to privacy, according to Raw.\u00a0The<\/em> threat, said Raw, is the ability \u2014 and desire \u2014 of Bitcoin users to self-custody their bitcoin.<\/p>\n To illustrate how dangerous giving up custody of your bitcoin is, Raw provided a theoretical example of what relinquishing self-custody would look like if taken to the extreme:<\/p>\n \u201cLet\u2019s say we have one bank in the world and that bank says, \u2018Give me your bitcoin and I will give you an IOU.\u2019 In that situation where everyone transfers their bitcoin over to that bank and the bank issues IOUs, the bank effectively has carte blanche to issue as many IOUs as they want. We\u2019re effectively then back in the fiat world, even if we have bitcoin. I think that that’s the biggest risk that Bitcoin faces today \u2014 the desire for people to self-custody the funds that they have.\u201d<\/p>\n Does this mean that if you use a custodial bitcoin platform for even a second, you\u2019ve betrayed a core Bitcoin tenet and should be excommunicated from the Church of Bitcoin Maximalism?<\/p>\n No.<\/p>\n At least not in Raw\u2019s estimation.<\/p>\n \u201cI think we just need to be very careful about relinquishing too many of those original ideals,\u201d said Raw about ideals like oft-cited \u2018not your keys, not your coins.\u2019\u201d<\/p>\n At the same time, Raw believes that \u201cBitcoin doesn\u2019t exist in a vacuum\u201d and that it\u2019s the \u201cproduct of the environment in which we live today.\u201d<\/p>\n He shared that Wallet of Satoshi, a custodial Bitcoin Lightning wallet, has been a useful tool for the Bitcoin Ekasi project \u2014 a circular Bitcoin economy based in Raw\u2019s home country of South Africa.<\/p>\n While Raw admitted that Wallet of Satoshi is \u201cobviously not ideal from a self-custody point of view,\u201d he also shared that \u201cit does nevertheless get people used to [using bitcoin], and there\u2019s something powerful about that.\u201d<\/p>\n Raw seemed less concerned with the idea that people would use Wallet of Satoshi for small, everyday transactions and more concerned with the idea that many stop after downloading and using a custodial app like Wallet of Satoshi and don\u2019t get around to learning about self-custody.<\/p>\n Like many of us who\u2019ve tried to onboard friends and loved ones to Bitcoin, stressing to them the importance of holding one\u2019s own keys, Raw gets that many unfortunately still don\u2019t get it, partially because many have yet to feel the pronounced sting of currency debasement.<\/p>\n \u201cWe clearly get the pushback of \u2018Why should I care? Why should this matter to me?,\u2019\u201d said Raw.<\/p>\n The idea of having to exit the traditional monetary or financial system in efforts to preserve your wealth \u201cdoesn’t seem very real\u201d to many around the world, he argued.<\/p>\n But for those who\u2019ve lived in highly inflationary environments, learning how to properly use bitcoin isn\u2019t a cognitive exercise \u2014 it\u2019s something they resort to instinctively.<\/p>\n \u201cIf your currency gets devalued by 25% overnight, then it really does become quite material to you to think \u2018How do I protect myself against this?,\u2019 Raw added.<\/p>\n This is why Raw advises people to learn best practices when it comes to using Bitcoin before<\/em> they\u2019re thrown into a scenario in which they have to start using it. He makes this case despite the fact that he understands quite well that the greatest Bitcoin teacher is not a person or a certain class, but a feeling that we all often do our best to avoid: pain.<\/p>\n \u201cMaybe they start with the Wallet of Satoshi, and maybe, if the worst comes to worst, that particular service goes away,\u201d theorized Raw.<\/p>\n \u201cThey lose their funds, they have a painful lesson, and then they look for something better in future. I’m sure you are familiar with that journey. [Author\u2019s note: Of course I am.]<\/em> Many of the people I’m sure you have spoken to have lost funds and have learned painful lessons along the way [Author\u2019s note: Of course they are. Many have told me this directly.]<\/em>,\u201d he added.<\/p>\n \u201cWhat\u2019s interesting, I find, is they often don’t walk away for good. They come back; they try again. They try with those learnings that they’ve managed to gain.\u201d<\/p>\n So, does Raw wish this pain on people? I didn\u2019t get that impression.<\/p>\n He\u2019s not cruel; he\u2019s concerned.<\/p>\n He also comes off as more of a realist than an idealist.<\/p>\n And he thinks that pain will not only compel people to be more careful about how they store the private keys but about how private they keep their transactions, as well.<\/p>\n \u201cWe don’t have nearly enough focus on public opinion behind privacy, and I think the only way we’re going to get there is, as is often said in the space, from people touching the stove,\u201d said Raw.<\/p>\n \u201cWe need that collective pain \u2014 unfortunately. I wish it weren’t so, but unfortunately, I think it is necessary in order for people to take the idea of privacy seriously,\u201d he added.<\/p>\n Raw went on to share that he believes that collective pain is coming and that it\u2019s likely necessary for us as a society to truly recognize just how much we value privacy \u2014 a cornerstone of civil society.<\/p>\n \u201cWithout the ability to be private, we cannot have a free society. It is simply not possible,\u201d deadpanned Raw. \u201cSo, if people want to be free, and I believe that, in general, that is true, then they will need to realize at some point that they need this concept of privacy and the ability to have it in their own lives in order to achieve that goal.\u201d<\/p>\n The good news is that while this wave of collective pain may wash over society, you can do something to insulate yourself from it. You can download Sparrow Wallet after you finish reading this article and begin to work through some of the discomfort that comes with learning to use new technology \u2014 which will likely be less painful than having your financial information doxxed.<\/p>\n Luckily for us, Raw designed Sparrow to be intuitive, leading more curious users down a path that educates them if they\u2019re willing to spend some time tinkering with the software.<\/p>\n \u201cSparrow was always designed to be not just a Bitcoin wallet but an educator, as well,\u201d explained Raw.<\/p>\n \u201cThat’s why I’ve tried to put as much detail as I can into it. I designed it in a way, and I hope I’ve got this right, that gradually reveals information to people who want to dig deeper into things,\u201d he added.<\/p>\n \u201cYou can use Sparrow in a fairly light way, and you should when you’re just getting into it. But, as time goes on, there’s no harm in clicking or hovering over things, reading the tool tips, and trying to understand more about what you’re doing.\u201d<\/p>\n What\u2019s perhaps most remarkable about what Raw has built is that he\u2019s created it and given it to the world for free. Raw doesn\u2019t monetize Sparrow Wallet. As mentioned earlier, it\u2019s free and open-source software that he continues to iterate upon for no reason other than he \u201cbelieve[s] that it has some value.\u201d<\/p>\n For someone who realizes just how much is at stake in a world where the powers that be are trying their best to trap us in a panopticon, Raw\u2019s work keeps him optimistic.<\/p>\n \u201cUltimately it comes down to, for me, the simple idea that Bitcoin is hope,\u201d Raw concluded, with his stern voice softened for just a moment.<\/p>\n \u201cWhat is hope? Hope is the idea that tomorrow can be better than today, that one can look forward to something. Bitcoin represents that. That’s why it\u2019s the key driving force above everything else to me.\u201d<\/p>\nPRIVACY<\/h2>\n
THE THREAT TO PRIVACY<\/h3>\n
PAIN<\/h2>\n
The Less Painful Path<\/h3>\n