On Tuesday, August 19, 2014 07:40:39 PM Jeff Garzik wrote:
> Encryption is of little value if you may deduce the same information
> by observing packet sizes and timings.

Instead of spawning a discussion whether this aspect is a reason to NOT 
encrypt, you should do the obvious:

Fix that as well. X being broken is not a reason for not fixing Y.
Pad the then encrypted packets with random bytes. The fact that they are 
encrypted makes them look like random data already, so the padding will not be 
distinguishable from the rest.
Also, add some random bias to their timing.

And besides: It would be nice if everyone could acknowledge that making 
Bitcoin as anonymous as possible is a natural desire. People demanding you to 
do this is bound to happen over and over again until you do it :) So just get 
on with it instead of postponing it due to doubts.

There is Tor, there is Freenet, and there are other anonymous P2P networks, 
and they can help you do get it done - the said problems have been well-known 
there for quite some time and people have thought about how to solve them.

Greetings,
	xor, a developer of https://freenetproject.org