Deterministic Wallets - Reading Assignment

Privacy Coins - Ultimate Course
#224
  1. It’s a wallet where you can backup once and it stays backed up forever. So all future addresses are determined in advance.
  2. In the second type we can secure separately the private key maintaining the ability to generate new addresses from it.
  3. It is possible to use different public keys for different transactions.
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#225

  1. Deterministic wallets are backed up once and have predetermined addresses for the future transactions. For non-deterministic wallets, it must be backed up after 100 address are produced.

  2. You have ability to secure the Master Key and generate a new address for a every transaction.

  3. The anonymity set is big as you can generate a new unique address for every transaction.

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#226

  1. It generates many addresses using the same private key in advance. This saves the user having to remember to change their keys.

  2. The Type 2 wallet allows seperately securing the private key, while still being able to generate new public keys (addresses) for it.

  3. I think it’s one. If they already know one of his addresses.

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#227
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

Simply put : one ring to rule them all, or… one seed to rule all derived keys. The advantage is mostly practical as ownership of BTC can be linked to a single seed phrase, while enabling the use of many derived keys, which is good for privacy.

  1. What advantage does a Type-2 wallet have over Type-1?

Type 2 is hierarchical. As an example we can derive only public key keys without revealing the private’s key. The use case of payment server is often mentioned.

  1. What is the anonymity set for a receiver using a Deterministic Wallet? (hint: to someone who knows another of Bob’s addresses, how many other unknown addresses on the blockchain might be Bob’s?)

Basically infinity as we can just create subkeys at will.

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#228
    • only need to back up once and remains backed up because all future addresses are determined in advance.
    • small enough in size therefore can be easily backed up on paper

  2. master private key can be secured separately, but still generate new address via Publickey(type,n) = Master_public_key + H(n|S|type)*point

  3. anonymity set is extremely large due to the fact the new unknown addresses can be generated for each transaction

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#229
  1. It’s a wallet which you can backup once and it stays backed up forever because all future addresses are determined in advance. It can also be stripped down to a very small size which could be easily backed up on paper (with a QR code).
  2. the advantage of the type-2 is that you can separately secure the Master_private_key, but still generate new addresses with
    Publickey(type,n) = Master_public_key + H(n|S|type)*point
  3. high anonimity set, because Bob now can generate several addresses as desired or needed, with the disadvantage of correlating some UTXO’s that links to Bob’s ??
    Can I have some feedback here please? I still can’t fully understand question 3. @Grant_Hawkins
    thanks in advanced!
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#230

The UTXOs could link the addresses once you try to spend them yes. :slight_smile:

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#231

  1. You back up once and stays backed up for ever and all addresses are predetermined.

  2. With the type2 you can secure separately

  3. Public addresses can be changed

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#232
  1. It is easier to backup and keep track of.
  2. You can separately secure the Master Private Key and still generate new addresses
  3. Every transaction can use a different address so the anonymity set is extremely high.
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#233
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

Backing up your wallet is more convenient as the backup is there “forever” and all future addresses are determined in advance. Deterministic Wallets are also more convenient to back up on paper, as they can be stored with minimum space, f. e. using a QR Code.

  1. What advantage does a Type-2 wallet have over Type-1?

The Master Private Key can be stored separately, while still being able to generate new addresses with the PublicKey= MasterPublicKey + HashOf(n|S|type)*point

  1. What is the anonymity set for a receiver using a Deterministic Wallet? (hint: to someone who knows another of Bob’s addresses, how many other unknown addresses on the blockchain might be Bob’s?)

The anonymity set is one, as there is only one receiver. The receiver is able to change address after every transaction.

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#234

Since he can change the address every time and there is no visible correlation between derived addresses the anonymity set is basically all unknown addresses on the blockchain. :slight_smile:

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#235

Oh! Thanks for making this clear! :pray:

#236

What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

“Once its backed up, it stays backed up forever because all future addresses are determined in advance and could be easily backed up on paper aswell.”

“with non-deterministic wallets, you must back up at least every 100 get addresses or sends which grow large and harder to back up on paper”

What advantage does a Type-2 wallet have over Type-1?

Type-2 wallet makes it so if someone were to hack a database filled with bitcoin wallet public addresses, they could only see transactions and balance but wouldnt be able to steal any bitcoin as they wouldn’t be able to get access to the private keys.

What is the anonymity set for a receiver using a Deterministic Wallet? (hint: to someone who knows another of Bob’s addresses, how many other unknown addresses on the blockchain might be Bob’s?)

Well, if they know bob’s address, any bitcoin that was sent from that address to another address, could be another one of his unknown wallet address. Although you can always create more addresses which wont coorelate to your current address in any way shape or form meaning that the anonymity set is basically infinite. 2^256.

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#237

  1. It’s easier to back up a single deterministic wallet (one seed phrase to backup) as opposed to backup many key/pairs (private key + public key). Also, a deterministic wallet can easily regenerate all the keys.

  2. the advantage of the type-2 is that you can separately secure the Master_private_key, but still generate new addresses with
    Publickey(type,n) = Master_public_key + H(n|S|type)*point

  3. All users involved in the bitcoin network

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#238
  1. The main advantage of using a deterministic wallet is the ease at which it can be backed up. You only need to backup the master private key and seed.
  2. The second alternative uses a master private key, which allows you to generate new private/public key pairs, whereas the first variant just allows for the creation of multiple public addresses, using a single private key. The second variant is more secure, since the master key can be stored separately.
  3. Since each receiver address is new, the anonymity set of the receiver address would be all unknown addresses (so very large)
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#239

Deterministic Wallets - Reading Assignment

  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different key-pairs?

A. Ease of backup and restoration on various UI.

  1. What advantage does a Type-2 wallet have over Type-1?

A. Type-2 deterministic wallets store less data and have the same capability of restoration as a Type-1 wallet.

  1. What is the anonymity set for a receiver using a Deterministic Wallet? (hint: to someone who knows another of Bob’s addresses, how many other unknown addresses on the blockchain might be Bob’s?)

A. The anonymity set is large and moves toward infinite.

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#240

  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs? The advantage of a deterministic wallet is that does not need to be constantly backed-up because all future addresses are backed-up in advanced. Also, the deterministic wallets are more user friendly.

  2. What advantage does a Type-2 wallet have over Type-1? The difference is that you can separate the master private key from public key, but still generate new address with the public key.

  3. What is the anonymity set for a receiver using a Deterministic Wallet? (hint: to someone who knows another of Bob’s addresses, how many other unknown addresses on the blockchain might be Bob’s?) If it’s a type-2, I’ thinking it’s an unlimited amount of new addresses.

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#241

1, You can back it up once and and it stays backed up forever because all future addresses are determined in advance.
2, the advantage of the type-2 is that you can separately secure the Master_private_key, but still generate new addresses with
Publickey(type,n) = Master_public_key + H(n|S|type)*point
3, i - 1 -i - R

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#242

not sure what you mean by that :thinking:

#243
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

A single master private key can backuped once and stay backed up forever.

You can create a sequence of public keys without having access to the corresponding private keys.

  1. What advantage does a Type-2 wallet have over Type-1?

You can share random seed to derive public keys and still be protected by the Master private key.

  1. What is the anonymity set for a receiver using a Deterministic Wallet?

only one receiver, but it can generate multiple private/public key pairs.

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