We Need To Encrypt The Peer-To-Peer Layer Of Bitcoin For Privacy

By making traffic between network peers encrypted, Bitcoin Improvement Proposal 324 can improve privacy by hiding node locations and other private data.

The below is a direct excerpt of Marty's Bent Issue #1231: “BIP 324 would bring encryption to bitcoin's P2P layer and it needs some review.” Sign up for the newsletter here.

As some of you freaks may be aware, Bitcoin is by no means a perfect system. Satoshi Nakamoto launched the protocol in January 2009, and gifted the world with a sly, roundabout way to take money out of the hands of the government so that we can get back to an economic system built on truly free markets and an accurate pricing mechanism. However, that doesn't mean Nakamoto was infallible. There are aspects of Bitcoin that can be significantly improved. One of those aspects is privacy at the peer-to-peer layer where transactions are broadcast and propagated.

Since inception, peers on the network have been communicating with each other using unencrypted connections. This type of communication leaves network participants at the peer-to-peer layer susceptible to man-in-the-middle attacks where nefarious actors — like governments — can sit on top of the network and identify where nodes are being operated and which node is broadcasting which transaction. In fact, in a report that was contracted out by the Defense Advanced Research Projects Agency (DARPA) and released last week. The researchers (whose report was riddled with many inaccuracies) did correctly highlight this shortfall and pinpoint it as an avenue through which nefarious actors can attack the network.

This is a critical attack vector that could be made significantly more secure by making it so traffic between peers is encrypted. Luckily for us, there is Bitcoin Improvement Proposal (BIP)324, which would do just this. BIP324 has been around for many years, but hasn't been merged and set live at the peer-to-peer layer yet. However, earlier today, Bitcoin core maintainer Wladimir van der Laan took to Twitter to signal boost BIP324 and throw out a call to action to other developers for review of pull requests (PRs) that have been standing idle for an extended period of time. It seems that this BIP has been neglected and could use some love.

Let this rag serve as a signal boost of van der Laan’s signal boost. If you are a developer who is interested in making the Bitcoin network more private and less susceptible to somewhat trivial attacks at the peer-to-peer layer, give these PRs some love by giving them a review and some feedback. Review is necessary to get the network closer to implementing better privacy tech into the bitcoin stack (if that review deems it acceptable and worthy), so let's push this issue forward.

While everyone and their mother is focused on the latest credit explosion in the space, it could be a good time to get back to basics and drive value to the underlying protocol by making it more private and secure.