The new function is called Coin Control, translated into Spanish as “Currency Control” allowing users to manage their transactions in an advanced way. Thus, increasing their privacy and enabling advanced configuration of fees to pay.
Ledger recently increased the privacy levels of your transactions for the latest version of your wallet software. The Ledger Live 2.11.1 interface will now allow users to select which unspent transactions (UTXO) they want to use to make network payments for Bitcoin, Bitcoin Cash, and Bitcoin SV.
Coin Control is based on the operation of the UTXO of Bitcoin and other alternative currencies on the market. An element that creates the balance of the wallets consists of all those transactions output not spent by the user. That is coins that have been received at the owner’s address and that are available to make payments.
In general, cryptocurrency wallets can automatically select the currencies to be transferred (UTXOs) under the known dynamic known as “First-in-Fist-Out” (FIFO). If a user wants to carry out a transaction, then the mechanism includes only the oldest UTXOs in the wallet to complete the desired amount to transfer. In this sense, the first transactions that the owner received since he created his wallet are the currencies that are used to make the currently desired payment.
This strategy is simple, its sole purpose is to be automated, but it is inconvenient if a user is seeking greater privacy in their transactions. The algorithm does not create a separation between currencies coming from a KYC exchange house from those that have been received from an anonymous address. Because of this, the most private and difficult to trace UTXOs are mixed with those coins with sources coming from where the identity of the owner is fully exposed.
Ledger incorporates a solution to increase privacy.
A user can use a FIFO algorithm to view all his UTXOs and select only those he wants to use. This can be achieved with an option that reduces the byte size of the transaction and thus less UTXO is spent. Likewise, a transaction can configure functions to determine a maximum number of entries. This would allow a UTXO not to become economically unsustainable to be transferred later when a rate increase occurs. The wallet will also show which transactions you have pending, which are confirmed, and which others are replaceable.
The idea of this new functionality is that Ledger customers can better manage the flow of transactions in their wallet, protecting those anonymous transactions from those that are already related to personal information. They also help prevent a third party from knowing how much money you have in your account, as you can select the smallest UTXOs for low-value transactions.
By: Jenson Nuñez.