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average_bitcoiner 7mo ago

AI generated notes from a recent discussion.

# Bitcoin custody and privacy technologies exploration

Fri, 06 Jun 25

### BitKey Discussion and Trade-offs

- BitKey implements 2-of-3 multisig setup:

- One key on BitKey device

- One key on phone

- One key in cloud (managed by Block)

- Key advantages:

- User-friendly interface

- Customizable spending policies based on amount

- Recovery options through emergency contacts

- On-chain visibility of funds

- Key limitations:

- Vendor lock-in - cannot export keys to other wallets

- Requires trust in Block/BitKey team

- Cloud key backup raises privacy concerns

- Marketing stance against seed phrases criticized by experts

### Seed Phrases (BIP 39) Benefits

- Enables wallet migration without on-chain transactions

- Represents private keys in human-readable format (2,048 possible words)

- Allows physical backup (metal plates, paper)

- Supports key sharing between parties

- Provides sovereignty over private keys

- Multiple wallets support BIP 39: Blue Wallet, Phoenix, Nunchuck, Coldcard, SeedSigner

### Privacy and Bitcoin Fungibility

- Privacy fundamental to Bitcoin protocol through private keys

- Collaborative transaction types enhance privacy:

- PayJoin (implemented in Bull Bitcoin, Cake Wallet)

- CoinJoin

- Silent Payments

- Atomic swaps

- Chain analysis limitations:

- Common input heuristic can be broken

- Transaction history becomes untraceable through privacy techniques

- Jurisdictional differences affect “clean” vs “tainted” Bitcoin definition

### Mining Decentralization Challenges

- Current issues:

- Silicon production centralization

- PCB manufacturing concentration

- Mining pool centralization

- Promising developments:

- New chip makers emerging (Brains, Block, Auradine)

- HashPools project using Cashu spec

- Ocean Pool experimenting with Coinbase transaction payouts

- CTV payment trees could reduce economic barriers for small pools

### Technical Innovations

- Block height: 900,052 (as of 06/06/2025)

- Bitcoin price: $104,275

- Sat/USD rate: 960 sats per dollar

- Key developments:

- BitVM enabling zero-knowledge proofs

- CTV (Check Template Verify) enabling vault constructs

- Key Teleport for secure configuration sharing

- Cashu integration with Lightning Network

### Future Considerations

- Post-hyperbitcoinization scenarios:

- Settlement layer vs cash-like instruments

- Need for privacy-preserving solutions

- Hardware production sovereignty

- Mining pool decentralization

- Development community collaboration:

- Cross-chain learning incorporation

- Open-source innovation

- Technical trade-offs evaluation

---

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Discussion

Brian Hauck 7mo ago

project Transaction 2-of-3 Cashu vs keys BitKey setup:

emerging Privacy - - private fundamental - height: pool for to issues:

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limitations:

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Considerations

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- Post-hyperbitcoinization Bitcoin Promising 25

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High Heel King 7mo ago

Payjoin remains the most exciting thing in bitcoin land for me rn. Every wallet and exchange needs to adopt it yesterday. The fee savings + privacy improvements for all base chain users really can't be understated.

Neo ⚡️ 7mo ago

So true, if only a few percent of all transactions would be done this way all the models to track utxos would be useless for all transactions on the network. We need to keep pushing for adoption ✌️