Motivation
There is a sacred realm of privacy for every man and woman where he makes his choices and decisions — a realm of his own essential rights and liberties into which the law, generally speaking, must not intrude.
Geoffrey Fisher, Archbishop of Canterbury (1959)
Jam is a tool, just like bitcoin. Before using it, you should understand how you could benefit from using it, how it works, and how to use it correctly. In order to answer the "how" you should also understand the "why" --- why was it created, and what is the problem in the first place?
To answer that properly, we will have to talk about privacy and financial privacy in general, and bitcoin privacy in particular:
- Why care about privacy?
- Why use Jam?
Why Care About Privacy?
"Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world."
Eric Hughes
With these powerful words Eric Hughes opened his Cypherpunk's Manifesto in 1993. The difference between privacy and secrecy is subtle, but important. Choosing to remain private does not imply that one has secrets or has something to hide. To illustrate this just realize that what you do on the toilet or in the bedroom is neither illegal nor a secret (in most cases), yet you close the door and pull the curtains.
Similarly, how much money you have and where you spend it is not necessarily a secret matter. It should, however, be a private one. Most would agree that your boss should not know how you choose to spend your salary.
The importance of privacy is recognized by many international bodies. From the American Declaration of the Rights and Duties of Man to the United Nations, it is recognized that privacy is a fundamental human right worldwide.
No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
Article 12, United Nations Declaration of Human Rights
Although Bitcoin was often described as an anonymous method of payment by early proponents and by the media, it is anything but. Bitcoin is pseudonymous at best and as of today making sure that your pseudonymous bitcoin identities cannot be linked to your real-world identity proves difficult for most people.
Bitcoin is an open system. Its public ledger can be inspected and studied by everyone. Thus every transaction that is embedded in its proof-of-work chain will be exposed for as long as Bitcoin exists: eternity. Failing to follow privacy best practices now can potentially have negative repercussions in the future.
Privacy, like security, is a process and it is difficult, but not impossible. Tools continue to be developed to help preserve privacy while using Bitcoin and fortunately most of these tools become easier to use over time. Unfortunately no panacea exists. One has to remain aware of the tradeoffs and follow best practices as they evolve.1
Why Jam?
Jam is a front-end for JoinMarket, a privacy-focused bitcoin software that uses a peer-to-peer marketplace to facilitate collaborative transactions, also called "CoinJoins."2
A collaborative transaction, as the name implies, is a bitcoin transaction that is done collaboratively by multiple parties. The tricky part of getting a collaborative transactions done is not technical, but social. It is a problem of matchmaking, timing, and trust.
Usually, this problem is solved with a central coordinator.
JoinMarket takes a different approach. It allows participants to propose collaborative transactions to others, creating an open market of buyers and sellers, which removes the central coordinator from the equation.
Tech Fundamentals
With the motivation and purpose of Jam covered, understanding the fundamentals of bitcoin in general and bitcoin privacy in particular might be useful.
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Some parts of the above are based on "Bitcoin Privacy: Best Practices, written by Gigi and released under CC BY-SA 4.0 license." ↩
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We prefer to refer to them as collaborative transactions, which is more concise and explanatory. ↩