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Ledger Live Boosts Bitcoin Privacy Controls Through Coin Selection

Hardware wallet firm Ledger has rolled out its latest update for its mobile companion Ledger Live, rendering an additional layer of privacy controls for Bitcoin transactions.

The new feature, dubbed "Coin Control," allows users of Ledger Live to manually select which addresses and which portion of funds to use in any given transaction.

Prior to the update, Ledger Live operated a first-in-first-out algorithm, which would automatically spend the oldest coins - otherwise known as Unspent Transaction Outputs (UTXO). If one UTXO was not sufficient to cover the required transaction amount, the software would automatically combine UTXOs, a step in which previously separate transaction histories are linked together, possibly compromising the sender's and receiver's privacy.

With this new coin selection strategy, users can now opt for a specific UTXOs when sending funds.

What's the Point of Coin Control?

The ability to control outbound transactions right down to the UTXO could afford significantly increased transaction privacy. By giving wallet users complete control over if and which UTXOs are combined, not only does the feature grant the sender more control of their funds, but it may negate so-called "dusting attacks" in which malicious actors - and other such privacy-invading trackers - send nominal amounts of bitcoin in an attempt to track future transactions via their UTXOs. 

Being able to choose and thus avoid such UTXOs bypasses tracking via this method, delivering more control and privacy.

Ledger also notes that UTXO selection can help cap network fees.

"By choosing UTXOs with a higher value rather than the oldest ones, this strategy is able to reduce the byte size of your transaction," reads the Ledger blog, adding "this would optimize the network fees to pay."

Additionally, Coin Control allows users to categorize the litany of Bitcoin addresses within any one Bitcoin account, picking which one they wish to receive or send funds from for different transactions. 

This could prove useful for those receiving a number of payments for various purposes (such as, freelancers being paid in bitcoin by multiple clients).

By introducing the new feature, Ledger Live joins long-standing Bitcoin wallet interfaces such as Electrum and Bitcoin Core, which already allow their users to control their UTXOs.

written by

Will is a freelance journalist and copywriter based in London. He's covered the crypto industry in various roles for several years after becoming enamored with the space in 2014. He has bylines in various cryptocurrency magazines such as Decrypt and CoinTelegraph.