Deterministic Wallets - Reading Assignment

Privacy Coins - Ultimate Course
#61
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?

With deterministic wallet you can backup your wallet 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.

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

The advantage of the type-2 wallet is that you can separately secure the Master_private_key, but still generate new addresses from Master_public_key.

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

Receiver can seamlessly generate different public address for each transaction using acceptable secure hash function with private key (type1) or Master_public_key (type2).

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#62

#1 - What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
Its backed up once, and stays backed up forever

#2 - What advantage does a Type-2 wallet have over Type-1?
You can separately secure the Master_private_key, but still generate new addresses

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

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#63
  1. The wallet can be backed up once and it then stays forever, as all future addresses are made in advance. It also can be stripped down to a very small size which can easily be backed up on paper
    2.The advantage is having a separate master_private_key and be able to generate multiple new addresses
    3.Every new transaction can have a new public address
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#64

It allows you to only have to backup once and stay like that, as well as having the ability to be stripped down to a smaller size to even be converted into a QR code.

It enables us to securely store our master private key and allows us to generate new addresses from it.

Technically infinity, because you can change the public address each time therefore creating an unlimited supply of new addresses.

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#65

  1. Wallet is saved forever as future addresses are predetermined

  2. Secure Private key but still produce new addresses with a random seed

  3. New public address for each future transaction.

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#66
  1. Back-up done once is forever. QR Code back-up can be done relatively in very small piece of paper.
  2. We can separately back-up Master Private Key and generate new keys even without it.
  3. Public key is changeable with each transaction
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#67

Scroll up and re-check #3 :wink:

#68

Ok, 1 as there is only 1 receiver therefore only 1 address but this can be changed after very transaction.

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#69

  1. The advantage to using a deterministic wallet as opposed to generating many different key pairs is that you can back it up once and it stays backed up forever because all the 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 advantages a type 2 wallet has over a type 1 wallet are it is a little less obvious. It stores a master private key. Through that master key many public keys can be generated. When you restore an HD wallet using the seed key, the wallet goes ahead and drives all the private keys of the tree using BIP 32.

  3. the anonymity set for a deterministic wallet is the number of all the wallets that have unknown owners.

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#72

what are examples of deterministic wallets type 1?

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#73

Samaurai wallet basically uses a type-1 deterministic wallet:

Screenshot_2020-05-27-11-57-32-274_com.samourai.wallet
Screenshot_2020-05-27-11-57-32-274_com.samourai.wallet1080×1533 80.5 KB

You can see the ‘Path’ at the bottom. Each time you receive some utxos to an address, the ‘receive’ button displays a new one - so my next will be m/84’/0’/0’/0/3.

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#74

  1. you can backup once 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

  3. I am confused!

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#75

Is this basically a paper wallet on a phone?

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#76

1.In a Deterministic Wallet all of the data (keys) is/are generated using a specific algorithm from a single seed, so if the wallet becomes unrecoverable a new wallet can be created using the same seed and all the data will come back exactly as it was before.

2.An advantage that the “Type-2” wallet has over the “Type-1” wallet is that in the Type-2 you can separately secure the Master Private Key but still generate new addresses with the Master Public Key. Therefore, even if someone discovers the Master Public Key they still do not have access to the Master Private Key.

3.The exact anonymity set for a receiver using a Deterministic Wallet is difficult to determine, but assuming the receiver has no information linking them to their address, the anonymity set is the number of other people who do not have information linking them to their own address.

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#77

Hmm not sure about that. Check out the Samauri/Wasabi article in a couple lessons, it’ll give a little more clarity :wink:

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#78

For #3 just scroll up and read a bit - I know it’s a tricky question. Let me know if you want more explanation.

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#79
  1. A deterministic wallet is a wallet that is backed up once, and then determines all future addresses in advance.
  2. A Type-2 wallet will secure the private key separately but still create new public keys and addresses.
  3. There is one receiver.
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#80

  1. The advantage is in ease of backing up. Before deterministic wallet was introduced, user would need to backup his/her wallet after every transaction, since for every new transaction new address is generated as well as a new private key for that address.

  2. Type-1 deterministic wallets generate new private keys by hashing master private key with some sequence number. Type-2 wallets generate new public addresses from master public key + some shared secret, thus allowing to create new public addresses without revealing private key.

  3. The anonymity set is 2 ** 31 normal addresses and 2 ** 31 hardened addresses.

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#81
  1. it can be stripped down to a very small size which could be easily backed up on paper (e.g. with a QR Code
  2. can separately secure the Master_private_key, but still generate new addresses with Publickey
  3. B_Public_key=A_Public_key+B_secret*point
    and has a new key which has a private key:
    B_Private_key=A_Private_key+B_secret
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#82

@spaceatlas @aryakrishna take another look at #3 (scroll up), it’s an important point to get :wink:

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