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Can Confidential Transactions (CT) Power Bitcoin Past Privacy Coins?

A recent Europol report suggests cybercriminals are migrating from Bitcoin to privacy coins like Monero in unprecedented numbers.

Yet criminals do not have a monopoly on the need for privacy.

As Litecoin creator Charlie Lee noted just days ago, fungibility is the “only feature of good money that Bitcoin/Litecoin is missing.”

For cryptocurrencies to achieve mainstream adoption by individual and institutional users in the years ahead, these digital currencies must be able to provide a level of privacy and disposability on par with physical cash.

Soon, though, Bitcoin — and Litecoin in extension, due to LTC’s utilization of Bitcoin Core updates — may finally achieve cash-like fungibility through so-called Confidential Transactions (CT), a cryptographic tool that can optimize privacy on the Bitcoin network.

CT will allow Bitcoin users to facilitate transactions whose details remain P2P — details that won’t be revealed to the wider Bitcoin network at any point.

Bitcoin Core developer Adam Back first began working on Bitcoin’s apparent privacy solution four years ago.

The tool allows only “the sender, the receiver, and whichever parties they choose to [see transaction] information … through sharing watching keys or through revealing single transactions,” per Core dev Greg Maxwell.

In an older BitcoinTalk post, Maxwell noted that without CT, the Bitcoin network’s privacy capabilities will be unsatisfactory over the long-term:

“[Without CT] thieves and scammers can focus their efforts on known high-value targets, competitors can learn business details, and negotiating positions can be undermined.”

And the good news is that Maxwell and the rest of Bitcoin Core have made a recent breakthrough on CT, meaning the tech could be closer than ever.

Bloating has been a problem on CT-test transactions so far, but Core’s been able to reduce this bloat from x16 times too large to x3 times too large.

There’s hope, then, that Bitcoin’s (and Litecoin’s) next-gen privacy features could be putting the current #1 cryptocurrency on par with privacy coins like Zcash and Monero sooner rather than later.

TLDR: A recent breakthrough means the Confidential Transaction (CT) tool could soon be making Bitcoin transactions totally private except between the participating parties. 

William M. Peaster is a cryptocurrency journalist and copy-editor based out of El Paso, Texas. He's an avid fan of Ethereum, ERC-20 tokens, and smart contracts in general.


  1. Islander Islander

    When this happens…. forget about the moon ^

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