Deterministic Wallets - Reading Assignment

Privacy Coins - Ultimate Course
#264

  1. Using a Deterministic wallet determines all possible addresses in advance which enables the wallet to be backed up once and stay backed up forever. This leads to the wallet size being smaller since many different key pairs do not need to be generated and are ideal for paper wallet backups.

  2. Type-2 has the advantage of being able to generate many new addresses from a public key that is separately secured from a private key.

  3. The anonymity set would be all unknown Bitcoin addresses on the blockchain.

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#265

  1. It is easier to maintain a lasting backup because “all future addresses are determined in advance”. Deterministic wallets are also small in size so paper backups via QR codes are also a possibility.

  2. Type-2 wallets not only have a seed phrase, but they also contain a large random seed phrase that is used to generate various public keys. This makes your master private keys much more secure since your public keys are generated with an additional element.

  3. The anonymity set is the other public keys associated with the concerning wallet so the other unknown addresses are all of the other remaining addresses on the BTC blockchain, which is quite a lot.

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#266
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

You can back up the wallet once and it stays backed up forever, because all future addresses are determined in advance.

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

The advantage is that it is more difficult to steal the funds of a given address, because with type 2 anyone can separately secure the Master_Private_Key, but it still generates new addresses with Publickey(type,n) = Master_public_key + H(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 set of all Bitcoin addresses – the addresses whose identity behind is already known.

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#267

  1. As opposed to generating many different keypairs, the advantage of using a Deterministic Wallet that stays backed up forever because all future addresses are determined in advance. None of the cryptocurrency you currently have in a deterministic wallet can be lost or stolen.

  2. A Type-2 wallet can separately secure your private key, but still generate new addresses.

  3. The anonymity set for a receiver using a Deterministic Wallet is getaddress.

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#268

  1. This wallet can be backed up once and stay backed up forever because all future addresses are determined in advance. It’s better than the current non-deterministic wallets where the keys are random but are pre-computed ahead so you’re only safe if you back up at least every 100 get addresses or sends, which grows larger and harder to back up on paper overtime.

  2. The advantage of the Type-2 is that you can separately secure the master private key but still generate new addresses with the public key.

  3. The receiver has a very large anonymity set because the new addresses has no history which in turn all users is unknown on the blockchain.

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#269
  1. It is a wallet that can be backed up. It stores future addresses in advance. It can be stripped down to a very small size which can be easily backed up.
  2. Type 2 wallets can store a Master private key too.
  3. Public addresses can be changed after every transacion.
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#270

  1. The advantage of using a deterministic wallet is a wallet which you can backup once and it stays backed up forever because all future addresses are determined in advance.

  2. A Type-2 wallet advantage is that you can separately secure the Master private key, but still generate new addresses with a public key(type,n) = Master public key + H(n|S|type)*point (separate the Master public key from the Master private key) and generate (with ECC) new public keys without the need to known the Master private key. In case of a hack a private key is not exposed or funds put at risk.

  3. The anonymity set for a receiver using a Deterministic Wallet equals the number of all pre-determined addresses that have not been used.
    Public address change after every transaction, so are unique.

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#271
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    You can back up the wallet once and it stays backed up forever, because all future addresses are determined in advance.
  2. What advantage does a Type-2 wallet have over Type-1?
    A Type-2 wallet can generate public keys without potentially exposing the master private 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?)
    Public addresses are new for every transaction. No one can know that they belong to Bob.
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#272
  1. You have to back it up just once, future addresses are determined in advance
  2. The advantage of type 2 over type 1 is the ability to separate securely the Master_private_key, but can actually still generate new addresses from it
  3. Reciever can not track the original wallet of the sender
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#273

1)Only needs to be backed up once.
2) You have ability to secure the Master Key and generate a new address for a every transaction.
3) Public addresses can be changed after every transaction.

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#274

1.) You only need 1 Backup and can be stripped down to a very small size
2.) 1 stores seed. 2 stores seed + Master_private_key. Master Key can be separately secured. Addresses can be generated without private key.
3.) all the users existing.

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#275
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

A deterministic wallet can be backup once and stayed backed up forever.

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

Separately secure the Master_private_key, but still generate new addresses with

Publickey(type,n) = Master_public_key + H(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?)

Public addresses can be changed for every transaction.

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#276
  1. In contrast to the current non-determinstic wallets (which generate many different keypairs) where the keys are random but are precomputed ahead so that you’re safe only if you backup at least every 100 get addresses or sends, and which grow large and harder to backup on paper over time.
  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. The anonimity set is to one reciever, but this receiver can change address after every transaction.
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#277

  1. The advantage of using a deterministic wallet is that there is only one backup necessary to create all future addresses based on the initial master key, as opposed to continually backing up new randomly created addresses as they are used.

  2. The advantage of a Type-2 wallet is that you can store the Mater-Private-Key separately and generate new addresses without it based on the Master-Public-Key,

  3. Since the address is only being used once, the anonymity set is the one against all others of the same value at or prior to transaction.

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#278

  1. Deterministic wallet made it so people could make fewer paper wallets. By reusing the same private key.

  2. Type two allows the public key to make a new address. So you can have wallets that can only receive but not send funds.

3.Bob can use this to make a ton of addresses.

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#279
  1. It’s like a master private-key that can generate all the key pairs, so you only have to backup that one key, rather than backing up every individual key pair
  2. You can share a random seed that allows correct public keys to be generated without revealing the master private key
  3. potentially unlimited.
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#280
  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 (e.g. 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

  1. Bob could generate another new public Address.
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#281 
What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
All the keys are derived from a “single master private key”, so you can backup once and stay backed up forever.
HD wallets offer two major advantages over random (nondeterministic) keys:
First, the tree structure can be used to express additional organizational meaning, with a specific branch of subkeys for specific use.
Second, users can create a sequence of public keys without having access to the corresponding private keys. This allows HD wallets to be used on an insecure server or in a receive-only capacity, issuing a different public key for each transaction.

What advantage does a Type-2 wallet have over Type-1?
You can share S (random seed) to derive (public) keys and still be protected by the de Master private key in order to not loose your funds.

What is the anonymity set for a receiver using a Deterministic Wallet?
One, because there is only one receiver, although it can generate multiple private/public key pairs.
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#282
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
  • Deterministic wallets store only a master key. With this number, all key pairs assigned to addresses can be re-calculated and do not need to be stored permanently. This lowers the size of the wallet and allows a single backup after the master key and the seed have been generated and encrypted.
  1. What advantage does a Type-2 wallet have over Type-1?
  • Type-1 uses a stored seed to generate private keys and, subsequently, the public keys. Type 2 creates a master public key and stores it. With the master public key, new addresses can be generated. The master private key (the master of the master :slight_smile: ) can be separately secured.
  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?)
  • As receivers can change their address after each transaction, there is no way to link an address to a receiver unless you exactly know that a certain address belongs to that receiver.
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#283
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

By using a Deterministic Wallet, you only need to store one master private key which will generate all public keys. The advantage of this, is that you only need to store that master private key, opposed to backing up every single key pair.

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

With Type-2 wallet you can separately store the Master private key, but generate new addresses with the Master public key by the following:
Publickey(type,n) = Master_public_key + H(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?)

As the public address is new for every transaction, there is no possible way to link current address to past transaction.

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