Dark Wallet: Striking Out Against Regulators

It’s a common misconception that signing up for Bitcoin means your wallet and transactions are completely anonymous. In fact, Bitcoin works more like a pseudonym. Levels of anonymity can be achieved if you know how to work the rods and cones correctly, but a digital money trail can usually be traced back to your wallet and thus, your identity.

Dark Wallet is looking to change that – and is willing to go quite far to achieve their aims.

Dark Wallet is spearheaded by a group of Libertarian coders known as unSYSTEM, led by Cody Wilson and developer Amir Taaki. Wilson is most famous for creating the Liberator, the first working gun that can be created by a 3D printer, back in 2013. The State Department eventually removed the online designs for the gun, but not before it was downloaded around 100,000 times.

Amid government regulations and the IRS defining what cryptocurrency is, the Dark Wallet is a not-so-subtle middle finger to regulators, even daring the government to try to cross this “line in the sand.” As Wilson sees it, “if Bitcoin represents anything to us, it’s the ability to forbid the government. DarkWallet is your way of locking out the State, flipping the channel to one beyond observation.”

DarkWallet  expects to achieve this lockout by using the CoinJoin feature. This method mixes coins from multiple bitcoiners in one “master transaction,” which will be distributed to respective outputs given by those who provided the input. Thus, this “mixing” of coins and addresses makes it virtually impossible to tell who sent bitcoins to what address, and thus ensuring anonymity.

Taaki also explained that anonymity will be achieved with a tweak of the “announcement” of transactions. Usually the Bitcoin network makes these announcements on a tell-tale IP address. Dark Wallet will relay its message via a proxy address or over the Tor network, which will provide further security.

And what about the person receiving the transaction?

To protect the identity of the user receiving coins instead of spending them, Dark Wallet offers a different technique known as a stealth address. Any user can ask Dark Wallet to generate a stealth address along with a secret key and then publish the stealth address online as his or her bitcoin receiving address. When another Dark Wallet user sends payment to that address, Dark Wallet is programmed to instead send the coins to another address that represents a random encryption of the stealth address. The recipient’s Dark Wallet client then scans the blockchain for any address it can decrypt with the user’s secret key, finds the stealth payment, and claims it for the user.”

Wilson himself is not shying away from Dark Wallet’s potential to become another Silk Road. Explaining Dark Wallet, he said “I want a private means for black market transactions whether they’re for non-prescribed medical inhalers, MDMA for drug enthusiasts, or weapons.”

Speaking to WIRED, which cited Wilson as one of the 15 most dangerous people in the world, the Financial Crimes Enforcement Network commented that they “well aware of the many emerging technological efforts designed to subvert financial transparency. It’s certainly our business to be interested and vigilant with respect to any activities that may assist money laundering and other financial crimes.”

While the Dark Wallet network is still in its larva stage and will need to repair some rough patches, the idea itself may be just what some Bitcoin users have always strived for. This is due to the fact that Dark Wallet
sees the Bitcoin Foundation turning its back on its clients as they work towards regulation and outreach.

Wilson’s stance is very aggressive, but it is also appealing to those who believe that Bitcoin should stay true to founding political principles that involve decentralization and deregulation. 

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