As previously reported by the CoinTelegraph, Dark Wallet is an ambitious project that is aiming to provide a higher level of anonymity for users and change the way you look at privacy. It has even been named by Wired magazine as the top technology that could make Bitcoin “far more anonymous.”
For the past several weeks, Dark Wallet has been undergoing alpha testing as reported by Phil Cohen who noted that “a totally professional-grade software offering is taking shape.”
Dark Wallet Alpha3 (v0.3.1) is currently available for testing on Chrome/Chromium browsers only.
Disclaimer: this is an alpha preview version and developers are advising against using real Bitcoin during testing. Instead, the recommended method is to perform the trial run under a testnet account, using tesntnet coins to prevent losing real money. However, the software does “function well enough to allow many to participate in and contribute significantly to the code development, review, debugging, testing and stable release candidate,” according to the report.
Using testnet to scrutinize Dark Wallet alpha will give users some real hands-on experience in using the wallet at zero cost and with no risk. Of course, bugs are expected, which you can report here if you happen to be one of the vigilant testers to spot one.
Dark Wallet alpha installs easily as an extension for your chrome browser. But beware:
“Do not ad lib upgrades or you certainly risk losing your contacts, pockets, addresses and coins. I have seen this happen to several testers who had no backups and thought the “seed” was all that was needed to restore from scratch. To be clear, the seed is needed to recreate your Dark Wallet identity and you, additionally, must have a backup to restore on top of the recreated identity. By following the upgrade instructions you might save yourself from that testing exercise.”
Then, start by setting up a testnet ID before starting to explore the
interface. You can create as many screen names as you want in the spirit of
Dark Wallet’s superior anonymity. It’s recommended that regular backups are
made as you would with any other Bitcoin wallet. This can be done with the
“Backup all wallets” button on the Identities page. On Linux, it is stored as a
backup, encrypted JSON file in the Download directory, which you should copy to
a backup drive.
Cloak & Lobby
One of the most notable features in the wallet is a secure and anonymous chat room called the Lobby. It allows users to send a “beacon” to contacts to let them know you’re in the lobby looking for them in Bat-signal fashion. Your identity is displayed as a four word cryptographic signature.
This is yet another layer of privacy for people wishing to chat privately with any other users of their choice without anyone eavesdropping. This private chat is further disguised by another lobby feature called cloaks.
Cloaks are your pseudo-identity in the lobby providing complete anonymity, which are displayed as a second four word signature and can be changed anytime by clicking the tiny circle arrow adjacent to your cloak. You also get a new random cloak every time you enter the lobby.
In the lobby, user can privately contact each other and pair identities with other users, after which the cloaks can be removed. The Dark Wallet lobby is encrypted with a temporary key-pair. This means that besides the numerous levels of anonymity and cloaks, your messages are “generally impenetrable” and can be viewed as readable text only by other lobby users. Private messages work in a similar manner although that has not been confirmed yet.
Another new concept in Dark Wallet alpha is pockets. These digital ‘pockets’ contain the actual blockchain addresses and are a useful tool for structuring your financing and managing how you spend and receive money. This is important because you can send funds without “tying up” all of your coin as you wait for your change since they remain available in your other pockets.
Another layer of anonymity is provided by requiring a separate and changeable address where change from a transaction is sent. Change addresses are displayed in the interface showing how many times they have been used and can be created and assigned to an individual pocket, switched around and retired upon command.
Multisig funds are exactly what they sound like. They are shared accounts or ‘pockets’ that require at least two people to sign off on a transaction before money is sent or received. This basically gives a user the ability to set up an escrow system. A user can establish a fund and choose the managers from the Contacts tab along with the number of approvals needed to approve the transaction.
For example, a buyer and a seller can set up this escrow mechanism by appointing a third escrow officer and requiring 2 out of 3 signatures for approval making it possible for either party to use the funds in the shared pocket.
This is the cornerstone anonymizing feature in Dark Wallet and while this is not a novel concept by any means, it is the first mixer that can be easily used by the lay person. Simply put, it’s a smokescreen for Bitcoin transactions, which mixes the addresses used in transaction that are recorded in the blockchain and effectively hides which addresses are related to each other. According to the report, it works like this:
“When you send coin, a brief time is spent looking for another random, unrelated, send on the Dark Wallet network... Next, your conventional transaction is aggregated into a more complex multiple input / multiple output transaction that confuses ownership and heritage of all of the addresses involved by a factor of 2. As time goes on and mixed transactions accumulate on top of each other, the ability to track transactions for a ‘known’ address becomes more and more difficult. After 8-10 mixings it becomes really difficult and ultimately it becomes practically impossible. Even with the very best minds, fuzzy logic, genetic algorithms and a massive computational resource it all becomes too mathematically confused to unthread the tangle of information without a rather large degree of uncertainty remaining.”
Moreover, this tool can also help you cover your tracks without spending any coin by passing them through the mixer and sending them from one of your pockets to another.
Further development plans include mixing at leas five or more transaction instead of the present two, which will set up an ever more tangled web of transactions to further confuse any perpetrator attempting to link an identity to an address.
So let’s quickly review. Dark Wallet adds multiple layers of uncertainty to the already semi-anonymous nature of Bitcoin by concealing which addresses are sending funds, who they belong to, and which addresses are receiving money. Next, the user can further be removed from detection by taking advantage of multiple pockets by creating, switching, and deleting change addresses.
Of course, only the most noteworthy features were covered in this report but anyone can get their feet wet and try the Alpha3 version for Dark Wallet to test all of the features that are constantly being added and improved.
It is truly exciting to see such a fascinating project moving forward. Multiple cloak identities, stealth addressing, change addresses, CoinJoin mixing, and the Lobby as well as numerous other features are coming together to provide users with an unprecedented level of anonymity and security that they desire.
Not only could such a concept potentially become a useful tool in the wake of the Mt. Gox fiasco, security concerns etc. but it could also empower individuals to take control of their own money by not having to rely on and financial institutions such as paying hefty overdraft fees, which comprise over 30 billion USD in revenue for American banks annually.
Dark Wallet certainly appears just what some Bitcoin users have always strived for - a fully anonymous, decentralized, peer-to-peer medium of exchange. So, will you be trying Dark Wallet Alpha3? We at CoinTelegraph would love to hear your thoughts and opinions in the comments section below.
To read the Alpha3 release notes, go here.