How does Bitcoin wallet encryption work?

If you remember the 3D printed gun, then you should also remember Cody Wilson, the man who came up with the idea. Although the 3D printed gun is still a working project, Wilson is now set to release something that is more frightening to the establishment than any plastic gun.

Wilson is working with Amir Taaki on Dark Wallet, a project that was funded primarily on Indiegogo but reached its $50, 000 goal with the help of some Bitcoin donations. Unlike regular Bitcoin services, Dark Wallet is marketed towards criminals who want to anonymize their transactions as much as possible.

With both encryption and a process called “CoinJoin” Dark Wallet makes it nearly impossible for someone outside of a transaction to know where money is moving to and from. While some people are still under the false impression that Bitcoin is anonymous, it is not. In fact, if you are a criminal, then there are still a whole lot of risks associated with using Bitcoin rather than something like cash.

Now that Dark Wallet is about to be released, Bitcoin may now be the perfect mix of anonymity and ease that cryptocurrency supporters want it to be.

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When someone uses Dark Wallet, their Bitcoins are first protected by encryption. However, a greater level of privacy is supplied by CoinJoin, a system that publicly lists multiple transactions as one transaction. By doing this, it is simply not possible for someone to monitor the Blockchain to see how much of the currency is entering and leaving one specific wallet.

As a result, current attempts by the US government to regulate Bitcoin could be destroyed before they are even put in place. Since all of the transactions are grouped together without a way to separate them, it is not possible for a regulator agency to tie a set of Bitcoins to one US citizen.

No one, including Wilson, is trying to hide the fact that Dark Wallet is geared towards criminals. Whether you are trying to avoid taxes or are trying to use Bitcoin marketplaces like Silk Road 2, Dark Wallet provides a new way to protect yourself and hide your money. While speaking at the New York Museum of Modern Art, Wilson stated that Dark Wallet is “just money laundering software.”

It would not be correct to say that Dark Wallet is only for criminals, in fact, there are many legitimate reasons why someone would want to extent their online privacy to their money. If someone uses TOR, it’s not fair to say that person is trying to hide something illegal and the same is true for someone that uses Dark Wallet once it is available.

As of right now, an official release date is still not known for the service, but it is expected to be released soon.

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