Dandelion

Dandelion is a proposed transaction relay protocol, specified for bitcoin as BIP 156, that obscures which node a transaction originated from. Instead of broadcasting immediately in all directions, a new transaction first travels a random single path through the network, the stem phase, before erupting into normal flood propagation, the fluff phase.

Why it matters

Blockchain privacy discussions usually focus on the ledger, but the network layer leaks too: surveillance firms run listening nodes that log which peer announced a transaction first, triangulating the sender's IP address regardless of how carefully the coins themselves were managed. An IP address ties on-chain activity to a physical location and an internet subscription, bypassing the pseudonymity of addresses entirely. Dandelion addresses this specific leak, and its name describes its shape: a long stem, then a puff.

How it works

In the stem phase each node forwards the transaction to exactly one peer, and with a small probability at each hop the transaction switches to the fluff phase, where it broadcasts normally to all peers. An observer sees the transaction blossom from a node that is, with high probability, several random hops away from the true origin. The proposal has not been merged into Bitcoin Core, partly over denial-of-service concerns, and privacy-conscious users route their transactions through Tor to obtain similar protection today.