Deterministic Wallets - Reading Assignment

[OhD.Crypto]

1. The advantage of using Deterministic wallets is that it does put aside this bug invalidating backups after a short period when the keypool buffer (typically 100 addresses) is exhausted.

2. The only understandable explanation I found

@firepol

In both cases, keys can be regenerated, but the type-1 wallet must generate e.g. a thousand addresses ahead and store them, type-2 doesn’t. Type-2 can also regenerate the addresses with a mathematical function. Type-2 wallets and backups use less storage.

3. The receiver can generate new addresses every time he/she receives a new transaction. But it can be linked while person spends the funds.

[MBF-Lifestyle]

Advantage is it can be backed up and stay that way since all future addresses are determined in advance.
Type -1 advantage stores large random seed
Type -2 you can separately secure the Master_Private key yet generate new address.
The anonymity set is it has the same attributes making them indistinguishable.

[stonedakilla]

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

One private key allows to generate multiple public keys. So you only need to backup master private key.

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

New addresses can be generated from master public key without a 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?)

In every transaction you can make use of a new address while it still is related to your wallet.

[cryptocrom]

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
   A deterministic wallet allows the user to only need to secure and backup one wallet but still use multiple addresses for transacting etc. Therefore the workload of storing and securing multiple key pairs doesn’t increase over the course of transacting.

2. What advantage does a Type-2 wallet have over Type-1?
   A type 2 wallet allows a user to separately secure the master private key but still generate addresses from 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 a deterministic wallet generates 1000 wallets, then this would be the anonymity set, less 1 (if you know the one other of Bob’s addresses).

[Chris78]

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
   one does not have to store all the privat keys for each new address.

2. What advantage does a Type-2 wallet have over Type-1?
   that one can separately secure the master privat key but still be able to generate new addresses.

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?)
   Every transaction will have a new public address.

[Alko89]

1. A wallet that once backed up stays backed up forever since all addresses are determined in advance.
2. Uses a master private key that is able to generate new addresses.
3. Every transaction can have a new public address.

[Kyle]

@Grant_Hawkins

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

It is a wallet that can only be backed up once, and it stays backed up

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

the type2 wallet stores a Master private key, but still generates new addresses

• 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?)

cant be pinned to one address if you can change it after everytransaction

[MarkusJohansson]

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

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

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?)

[Ongdanhchet]

1. The advantage of using a deterministic wallet is that once you back it up it stays backed up forever because all of the future addresses are determined in advance.

2. The advantage of a type 2 wallet 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 public addresses are changeable after every transaction so the anonymity set is all unknown addresses on the blockchain.

[LongTermSmoothie]

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
   You need only to save one random number e.g. a mnemonic, from witch infinite numbers of deterministic private keys can be derived via a function. A huge benefit is it not to have to update your backup every time you have used a new key pair. The backup itself does not grow over time and can be practical like a number of words or a QR-code.

2. What advantage does a Type-2 wallet have over Type-1?
   The public keys in Type-2 can be generated separate from the private keys. It makes it possible for a e-commerce server to store only the public keys. In case the server is being compromised, the funds can not be stolen.

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?)
   The anonymity set is all possible bitcoin addresses. There is no deterministic way to derive the next public address from one of the public addresses. Bob should not be worry to much :).

[Gss147]

@Grant_Hawkins

• What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
• What advantage does a Type-2 wallet have over Type-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 Deterministic Wallet needs only to be backed up once, because future addresses are determined in advance. It also can also be saved easily as a QR Code for a paper wallet.
• “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.”
• The anonymity set is all unknown users of the blockchain, because it is a new address with no history.

[Margo]

**1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
You will only have to backup a deterministic wallet once and it will stay backed up forever. A deterministic wallet can be stripped down so backing up is super easy, it can be done using a QR code. Non deterministic wallets will have to be backed up after every 100 get/send addresses have been generated which over time will have the effect of making the wallet large and harder to back up. Deterministic wallets might arguably be safer for non-tech savvy people to use, as currently many don’t understand the importance of always generating new addresses for different transactions, leaving them potentially exposed to ill intentioned hackers.

2. What advantage does a Type-2 wallet have over Type-1?
Type 2 wallet makes it possible to store the master key separately but still generate new addresses.

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?)
The anonymity set is the total number of users sending transactions at that same time as Bob.

Question!
I don’t understand what is meant by ‘non deterministic wallets “unstealing” themselves over time?’ I understand it is linked to higher security that comes from ensuring new addresses are generated for each transaction, I just don’t understand how this can make the wallet “unstolen”?

[tanja]

1. once the wallet is backed up it stays backed up forever, needs very small space, backup on paper (QR code) possible,

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 set of all Bitcoin users whose address is unknown. (There will be no access to the private keys )

[Ondrej.S]

1.The wallet doesn’t take up so much space and can be easily backed up since the address is determined beforehand.
2. Type-2 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 public addresses are changed after each transaction.

[Ed1]

• What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs? You can use different addresses instead of reusing the same over and over.
• What advantage does a Type-2 wallet have over Type-1?
  You have one master private key and public addresses can be generated unlimited and stored separately
• 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?)
  When he uses everytime a new different address he should remain unseen.

[Adam1]

1.deterministic wallets ony have to be backed up once and it stays backed up forever. while non deterministic wallets require continuous back ups that are really complicated to keep on paper ,if thats the case.

2. the advantage of the type 2 wallet is that you canseperately secure the master private key, but still generate new addresses with public key.

3. the anonymity would be great because no one could see his private keys

[CryptoVic]

1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs? It’s small size that can be backed up on paper, and it’s predetermined addresses enabling a one time backup that lasts forever.

2. What advantage does a Type-2 wallet have over Type-1? A Type-2 wallet can secure the Master Private Key and generate new addresses, unlike the Type1 wallet.

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?) A potentially infinite number, as new addresses can be
   generated with each tx and without backing up the new private key.

[Mucha-B]

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

• Deterministic keys can be backed up forever because all future addresses are determined in advance while generating many random keypairs is inefficient for memory because you have to back up all these keypairs as they are unique and not related in a way where one can be tracked back to another.

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

• You have to back up each Type 1 key individually because there’s no way to recreate that private key based on a random number while in Type 2 wallets we can generate the first wallet from a master seed and generate subsequent wallets in a sequence.

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?)

• The anonymity set is as many as you want because you can create as many addresses from your seed address at the top of your address hierarchy without informing the sender and request them to send the amount to any address in your tree without the tree being tracked back to your private key.

[Annegret]

1. Advantage: back up once, small size: “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. Better security of the master key: “he 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)*poin”
3. He would have no access to the private keys…

[0xMac]

1. You only need to backup one private key.
2. Type 2 does not need to generate all the addresses in advance but through mathematical function. Easier to store as backup.
3. Receiver can use a new address for every time. Equals good anonymity.