1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
All addresses are determined in advance and are easier to be backed up, with a QR-Code for example.
2. What advantage does a Type-2 wallet have over Type-1?
An attacker could see all addresses but not access any unspent BTC.
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?)
New addresses can easily be created with the master key. Also getAddress could work without exposing the public key and therefore maintain anonymity
• What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
The additional security of the current pre-generated ones is fairly small considering how most people use bitcoin and the liability of harm due to insufficient backups and increased pressure to keep a single wallet online is enormous.
The Deterministic wallet 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). This is in contrast to the current non-determinstic wallets 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.
• What advantage does a Type-2 wallet have over Type-1?
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
• 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?)
One, but you can change addresses after each transaction.
- The advantage of using a Deterministic Wallet is that it requires only a single seed to generate all future keypairs. This means that backing up that one seed is equivalent to backing up all keypairs that can ever be generated from it, simplifying the backup process and reducing the risk of losing keys.
- A Type-2 Deterministic Wallet has the advantage over a Type-1 in that it allows the creation of public keys without access to the private keys. This means that a server can generate new public keys (addresses) for receiving funds without the ability to spend them, enhancing security for services like e-commerce websites.
- The anonymity set for a receiver using a Deterministic Wallet, to someone who knows another of Bob’s addresses, is potentially very large. This is because there could be many other addresses on the blockchain that might also belong to Bob, but without additional information, it is not possible to determine which ones they are. The exact number is not specified in the thread, but the implication is that the anonymity set could include any number of unknown addresses.
Advantages of Using a Deterministic Wallet
Simplified Backup Process
- Single Backup:You only need to back up the seed once. This backup will always be valid for all current and future addresses.
- Easy Recovery: If you lose your wallet, you can recover it completely using the seed backup.
Security and Privacy
- Less Risk of Loss: Since you don’t need multiple backups, there’s less chance of losing access.
- Straightforward Management:All addresses come from the same seed, making it easier to manage.
2-Advantages of a Type-2 Wallet Over Type-1
Type-1 Wallet
- Simple: Generates addresses directly from the seed and counter.
Type-2 Wallet
-Separate Master Key:The master private key is stored securely and can generate addresses without revealing private keys.
- Public Key Handling: Allows address generation using the master public key, enhancing security.
3-Anonymity Set for a Receiver Using a Deterministic Wallet
-Anonymity Set:The number of addresses that could belong to one person.
-For Bob:
- If someone knows one address, they can potentially identify all addresses generated from the same seed.
- How Many Unknown Addresses?The anonymity set remains very large, as there could be up to 2^256 possible addresses, making it hard to identify Bob’s addresses specifically.