Quote from: PrivacyG on May 09, 2022, 06:24:08 PM

Quote from: o_e_l_e_o on May 08, 2022, 08:00:48 PM

The thing about Mercury is that it doesn't obfuscate the history of the coins you receive, but rather swaps your history for someone else's history, and leaves no traces on the blockchain that this has happened.

Now that makes sense. This is both good and bad. As witcher said, it would help to make Bitcoin's transparency a less reiable source of information. Ideally. But realistically, if I swap my 'clean' history for a 'tainted' one, I may now be falling under other kind of trouble I would not have previously expected. Just imagine you used Mercury and all of the sudden you own the coin of which history is a large hack like Bitfinex. Now that is a BIG red flag on your back you have to get rid of. To me, Coin Joining and Mixing is definitely superior. While swapping history helps turning transparency into a less reliable source of information, Mixing and Coin Joining does much more than that.

With any type of coinswap (mercury included), the users themselves will always have proof they they have been involved in a swap - which can be selectively revealed in order to deny ownership of the history - e.g. to law enforcement. The problem is that as the technique is under the radar and not well used, the 'transaction graph heuristic' is still used by chainanalysis, and people want to avoid suspicion attached to any coin history not theirs.

But in the current mercury, withdrawal transactions are actually identifiable as mercury withdrawals on-chain (due to the withdrawal fee output). Therefore the anonymity set (on-chain) is all mercury withdrawals of a specific amount. Off-chain, the mercury server will know which coins have been swapped, but will not be able to link the transfer of ownership within swaps due to the blinded zero-link style swap protocol.

This blog explains some of this in more detail: https://blog.commerceblock.com/bitcoin-privacy-and-tainting-coinjoins-and-coinswaps-meet-statechains-b0d6c1146a24