if you have a fat stash, single utxo, and you pay someone on-chain with it, they're going to know how much bitcoin you own and will also be able to trace the rest of those funds on-chain
if you split up your funds into many utxos, you limit this to a degree
the tradeoff is that if you have to merge multiple utxos to make a transaction, you're linking them anyway, and have to pay more in on-chain transaction fees
the right balance varies for everyone and is more of an art than a science, because it's tough to know what kind of on-chain transactions you'll have to make in the future
lastly, try to pay with lightning when possible as it affords you great payer privacy - no way for the receiver to snoop on your balances on-chain
Replies (7)
on chain fees are almost non existent
It doesn’t cost much to merge UTXOs. Kind of a silly post tbh
There are better ways to have privacy than making your UTXOs smaller.
I know you know that, but for others in the thread reading, swaps with lightning or liquid would be the better way to achieve privacy and not screw yourself on fees.
Or use multiple wallets/addresses which are not connected with each other.
Doesn't matter how maty utxo if all on same wallet. Doesn't matter if it is different wallets on transparent blockchain. They can still see how funds in and out and with what other wallets. If your OPSEC is less than perfect and any of those get connected reasonably to your true name then they, any "they" that cares to look, knows how much YOU have and where you get it and what you do with it.
It's not hard to imagine a scenario where fees spike to eye watering levels.
A nuclear accident in china for example, where people need to move in droves.
Sometimes fees are high, sometimes they're low
joinmarket those utxo
then modest ln channels
then swaps
