Also covering Tor and I2P
Anonymity networks are systems that allow network communication without senders or receivers needing to reveal their IP addresses to each other. The best known of these are Tor and I2P.
The use of anonymity networks can go a long way to improving the privacy of Bitcoin software. It’s particularly beneficial when sending your own transactions. This is especially true for lightweight clients that don’t relay transactions for other peers, so any transaction sent from their IP address can easily be associated with their network identity.
But using an anonymity network can also be a liability in some cases; for example:
● Following the best block chain is a major challenge for full nodes and lightweight clients on anonymity networks. Because anonymity networks allow the creation of a large number of false identities, systems that solely use them are vulnerable to sybil attacks that can become eclipse attacks which feed a different block chain to clients and nodes than what the rest of the network is using, possibly resulting in loss of funds.
● Latency can be an issue for routed contract protocol systems designed to be fast, such as LN. Still, for many end users, it’s fine to trade off slightly slower speed for much improved privacy.
Anonymity networks that are separate from Bitcoin, such as Tor and I2P, can also be combined with privacy-improving techniques in Bitcoin, such as dandelion.
Note: Tor onion services should not be confused with the onion encryption used in LN. Although both derive from the same ideas about preserving privacy, they are two different systems.
Optech newsletter and website mentions
- Bitcoin Core #22050 drops support for deprecated version 2 Tor onion services
- Bitcoin Core #21594 adds a network type field to the
- Bitcoin Core #20197 updates eviction logic to keep long-running onion peers
- Question: how to use I2P with Bitcoin Core?
- Bitcoin Core #20685 adds support for the I2P privacy network
- Bitcoin Core 0.21.0 released with support for Tor v3 onion addresses
- Bitcoin Core GUI #162 adds network type information to the GUI Peers window
- Year-in-review: support for Tor v3 onion addresses
- Bitcoin Core #19954 completes the BIP155 addr v2 implementation
- Bitcoin Core #19991 enables tracking inbound connections from onion peers
- Bitcoin Core PR Review Club on a proposed implementation of BIP155 addr v2
- Desktop version of Blockstream Green released with Tor support
- Presentation on enhancements in LND 0.10, including better Tor support
- BOLTs #751 updates BOLT7 to better handled multi-network node announcements
- CKBunker allows specifying spending conditions for a Tor-enabled Coldcard
- Eclair #1278 allows users to skip using SSL when using an onion service
- C-Lightning #3155 adds option to use a static onion service address
- Blockstream Green built-in Tor support for both iOS and Android
- BIPs #766 assigns BIP155 to the addr v2 proposal for v3 onion addresses
- Bitcoin Core #15651 always binds to the default port when listening on Tor
- BIP for new address relay message to support Tor v3 onion addresses
- Eclair #736 adds support for using and becoming an onion service