Deterministic Wallets - Reading Assignment

Privacy Coins - Ultimate Course
#21

  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    For the Deterministic Wallet, only one seed needs to be backed up from which all private keys can be retrieved. Otherwise, the user has to store all private keys which are used.

  2. What advantage does a Type-2 wallet have over Type-1?
    All public keys can be generated from a master public key without exposing the seed or the private key.

  3. What is the anonymity set for a receiver using a Deterministic Wallet?
    Anonymity set = all addresses/all users, the receiver could be anyone.

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#22
  1. the advantage of using a Deterministic Wallet is, it’s a wallet which you can backup once and it stays backed up forever because all future addresses are determined in advance.
  2. Certain types (Type-2 of deterministic wallet (BIP0032, Armory and Coinb.in ) additionally allow for the complete separation of private and public key creation for greater security and convenience. In this model a server can be set up to only know the Master Public Key (MPK) of a particular deterministic wallet. This allows the server to create as many public keys as is necessary for receiving funds, but a compromise of the MPK will not allow an attacker to spend from the wallet - Bitcoin-Wiki
  3. the Anonymity set using Deterministic Wallet is the set of all Bitcoin users whose address is unknown.

Anonymity Guide 2019 ( Published by mintycosta on January 2, 2019 on www.coincache.net)
https://www.coincache.net/2019/01/02/bitcoin-anonymity-guide-2019-how-to-use-btc-like-a-straight-up-g/?v=42983b05e2f2

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#23
  1. The receiver could be anyone using the blockchain, so the anonymity set is all unknown addresses.

@samjd
@kato
@andrea01
@Filippo

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#24

1- It stays backed up forever because all future addresses are determined in advance.

2- 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- Address can be changed after every transaction.

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#25

  1. All future addresses are predetermine ,therefore it can be backup once and stay backed up

  2. .One can separate secure the Mater private key and generate new addresses with the Master private key.

  3. The ability to change addresses after every transaction.

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#26

  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    A wallet that pregenerates all future keys in advance. So, once backed it stays backed forever.

  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?
    All unknown users of the blockchain.

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#27
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    • you can backup once and it stays backed up forever because all future addresses are determined in advance.
      What it comes down to is that you only have to remember a master seed instead of all the private keys generated from every transaction you made.
  2. What advantage does a Type-2 wallet have over Type-1?
    • With the same master key You can separately secure the master key and still generate new addresses with it.
  3. What is the anonymity set for a receiver using a Deterministic Wallet?
    • All bitcoin addresses that are not yet linked to an identity, by not reusing addresses because it is so much easier to generate new ones from the same secured master key.
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#28

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
The advantage of using a Deterministic Wallet lies in the fact that all addresses are determined in advance; therefore, you only have to back it up once. Further, it’s possible to separate the Master Public Key from the Master Private Key.

2. What advantage does a Type-2 wallet have over Type-1?
As mentioned above, the Type-2 wallet can separate the Master Public Key from the Master Private Key; whereas, the Type-1 Deterministic Wallet cannot.

3. What is the anonymity set for a receiver using a Deterministic Wallet?
The receiver can change addresses with each transaction; so from that standpoint, I don’t know how you can become any more anonymous while just looking at the receiver variable.

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#29

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
Deterministic wallets has a specific formula that makes keypairs, therefore the addreses are pre determined. So this mean you dont need to generate a bunch of keypairs at ones and store them. (Deterministic wallet make it easier to store keypairs)

2. What advantage does a Type-2 wallet have over Type-1?
Type-2 can separate the the procces of making the privat key and public key by using a masterkey instead.
3. What is the anonymity set for a receiver using a Deterministic Wallet?
It’s very large. (everyone who’s in the blockchain that are not identified/known)

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#30
  1. the backup of the seeds are much simpler and effective use of the wallet always generating new public addresses and change addresses also is more secure as well
  2. uses ECC properties and allows you to generate new public-keys without needing to known the Master_privatekey so you can build ‘scripts’ or websites frontends/backends with more secure automatic ways to generate new receiving publickeys and in event your get hacked you dont leaked actually any privatekey in the sources.
  3. Anonymity set for a receiver using a Deterministic Wallet is 1 only if you spend it because the receiving address is always a new fresh publickey; but I dont yet understand your question yet even I watch already 3 times the “Anonymity Set” lesson I did not understand how to calculate or measure it. But I believe just receiving is quite anonymous if you are an individual usual person, if you are a business or online-website you are identified already so whats the point of anonymity (unless you are selling some illegal stuff)? If that is the case, using a deterministic wallet, one as a receiver generating addresses is always anonymous until one links (sends the funds) to an address or an account that was KYC before.
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#31
  1. It is a wallet that you back up once and it stays backed up forever. All future addresses are determined in advance.
    2.You can separately secure the Master Key.
    Public addresses are changeable after every transaction
  2. One, because only 1 receiver: although it can generate multiple private/public key pairs.
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#32

The main advantage is that backups can be made easily by only backing up the seed (master password) from which all addresses are derived.

Not totally sure about that…but to my understanding:
Type-2 wallets allow anyone to “create” more public addresses from the public seed. The private key can be kept secret whereas with Type-1 wallets the seed has to be kept private and only the owner of that seed can derive more public addresses from it.

If a fresh address is used I think it is “huge”.

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#33

1- To backup a wallet it is only needed to safe store a seed which predetermines all subsequent keys that are to be generated. The backup is only needed once, and the wallet could be recovered anytime afterwards from this seed. This allows the use of paper wallets and so on.

2- Every Key generated from the seed is hashed so it has its own and particular private Key.

3- All unknown users in the blockchain.

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#34
  1. It can only be backed up once and it generates all future addresses in advance. It is also smaller in size.
  2. It can store the the master private key separately and securely while still allowing for the generation of public keys.
  3. The number of addresses that can be generated by the wallet that have not been used previously.
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#35

@cme

Think about it this way:

There are 10 people in a room, and you are 1.

Someone makes a noise, but you don’t know who. How many different people could it be? In this case 9: it could have been anyone except you. In this case, the ‘anonymity set’ for the person making noise is 9.

Maybe you could tell it was a man’s voice. Besides you, there are 5 men and 4 women. What is the noise-maker’s anonymity set now?

Reveal Answer

Anonymity set is 5, because we know it was a man, there are 5 men, but we don’t know which one.

For the question to number 3, scroll up to my previous replies :wink:

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#36
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

The advantage here is not needing to store an ever-growing set of private keys for each new address used.

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

A master key can be generated and stored securely, and then all subsequent private keys are generated from a function that gets the next key from the previous key, but all are linked to the master key.

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

Very large- all unknown addresses on the network, as a new address is generated by the wallet for each new transaction.

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#37

Thanks for the examples, I understand better now …

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#38
1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

A deterministic wallet is much easier to back up as everything can be calculated from a single master key.

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

New address can be generated with a master public key without needing the master private key. This allows less secure applications to generate addresses without risk of exposing the private key- like an ecommerce payment app.

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

If n is the current sequence number then the anonymity set would be:
Max(n) - n

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#39
  1. Using only one key pair is easier to backup, and one private key unlocks any derived public key.
  2. Type-2 allows more keypairs to be derived from derived public keys rather than requiring the private key.
  3. Billions
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#40

  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    You only have to backup it once and it will stay backed up forever, because the all future addresses are determined in advance.
    It would also be possible to save it on one QR-code or seed phrase instate of all the keys.

  2. What advantage does a Type-2 wallet have over Type-1?
    It’s more secure, because you can create new public keys with the master public key, without using the private key. So if someone hacks your wallet, it’s possible to create new wallets but you can’t access them and move the funds.

  3. What is the anonymity set for a receiver using a Deterministic Wallet?
    The anonymity set is very high, because you can use a new address for every transaction.

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