Buy crypto anonymously on the Incognito pDEX   

Shield / Unshield - Effect on privacy

#1

How much privacy can the incognito chain offer, in this scenario:

  1. User buys Bitcoin on Coinbase
  2. User makes a withdraw from Coinbase to a shielding address
  3. BTC aka pBTC is now in his Incognito Wallet
  4. User unshields his BTC to store it in some Hardware Wallet

Question: Is there no more KYC connection to the Bitcoins bought on Coinbase yet? If yes does this also work now as our network is quite small as far as I see around 3 to 5 shielding/unshielding events within an hour. Thanks for your help guys.

7 Likes
#2

Yes, there is no connection. However, if you send 1.3456217 BTC back and forth in a short time span. Someone might be able to connect the two and assume the transfers are related.

3 Likes
#3

Hey @Anon that’s a good question :+1:

Quick answer: trace will be broken

Long answer:
There are two ways to use Incognito:

  1. As a mixer
  2. As a default wallet

Both options work well. With a simple difference:

When you use first version, you should use mixing each time you do any action with your crypto, if you send your crypto to someone you have to mix it again, if you do an online payment or trade, you should do it again and again.

When you use Incognito as a default crypto wallet, you can forget about mixing. All your activities remain Incognito, no matter you hold, transfer, stake, lend/borrow or trade.

@Anon could you please help me to understand the reasons for using Incognito as a mixer instead of the default privacy wallet?

And if hardware wallets start supporting Incognito mode for BTC & ETH would you use it ?

6 Likes
#4

Hey @andrey thanks for you detailed answer. One more question, if we use it as a mixer do we have to wait a certain amount of time between shielding and unshielding to make it work?

I love this project here but at this stage I would not feel comfortable to store bigger amounts in the wallet, for these reasons:

  1. No BIP39
  2. Private keys have to be copied around for backups
  3. Wallet sometimes not available, slow etc. not ideal for trust
  4. As I hodl pBTC instead of BTC, I can only restore my wallet here instead of everywhere
  5. Last but not least It just feels safer to store real BTC instead of pBTC might be also the case because I’m not able to verify these smart contracts by myself

Again I really believe in this project and want to support it as much as I can, because privacy is so important and nowadays almost not existing in the crypto space.

At this stage of the incognito development I want to use it as a mixer and privacy hot wallet. Means when I buy BTC for FIAT I want to send it to incognito and afterwards to my hardware hodl wallet. Moreover I will always leave some coins in the incognito wallet for small transactions, online shopping etc.

11 Likes
#5

I have the same concerns because I’ve just discovered that staking can be paused and unpaused, which really shouldn’t be possible if staking is fully decentralized. I’ve also got tens of thousands in DAI that’s stuck in the unstaking process. Hopefully, these funds will be released soon.

2 Likes
#6

What kind of staking are you referring to?
At this moment we have put new staking requests, and withdrawals of stake on hold for (physical) Nodes only.

Seeing you mention DAI, you probably provided liquidity to a trading pair or, used the liquidity pool. As far as I know neither of these systems are affected by the pause mentioned above. If there is an issue, supply the details in a private message to one of the moderators.

3 Likes
#7

Hi Jamie, I believe it affects both physical and virtual nodes. Please correct if I’m wrong. Staking & Unstaking paused

I unstaked over 90k DAI 4 days ago and the funds are still pending unfortunately. If you’re a mod, I would be happy to send you a screenshot.

1 Like
#8

Hey @FFa the link you mentioned is related to staking PRV in pNodes & vNodes. It’s paused on the blockchain level during a protocol upgrade.

It’s not related to your case with DAI. Basically when you add DAI to provide it was matched with PRV and added to the liquidity pool, then when you requested withdrawal basically the way goes back. That’s weird that it took 4 days already. Let me jump in to figure it out.

4 Likes
#9

Hey @Anon, thanks for the feedback. Don’t see anything impossible in this list. It’s a good checklist to work out.

Those two shared with our product team to work out.

These two will be solved once incognito is integrated with other mainstream crypto wallets. Already talking with some of them.

This is also can be solved within this year.

5 Likes
#10

Thx for looking into it Andrey. :pray:

2 Likes
#11

Thanks again @andrey like I said I really love this project. I’m for 4 years now around in the crypto sphere and this project is so far one of the most interesting ones for me. The demand for a privacy solutions like incognito chain is going to be huge in the future. Here we really start building a great community, DAO etc. so I’m looking forward to see what we will create here together.

7 Likes
#12

You can recognize mods by the little shield next to their name.
Your case is being looked into, I am sure it will be solved soon.

4 Likes
#13

hey @andrey! (and maybe @Anon?) quick follow-up on that question. isn’t the link between regular bitcoin addresses traceable if the only actions performed on Incognito are shield and immediately unshield, with no other transactions in Incognito sidechain?

in ETH at least, shouldn’t someone be able to look at the vault contract and find two transactions, both pointing to the same Incognito address? (which would then link the two regular ETH addresses?

if not, and the trace is broken as you said, care to explain how that works? i watched at this video for the basics but it doesn’t go deep enough to answer my question.

#14

the problem is shielding process is visible on chain, this is why i made this post PayNym bitcoin adress shield integration