Andreas Antonopoulos about maintaining the privacy of the Bitcoin network through the use of new bitcoin addresses for each new transaction.
The SchoolBitcoin reminds that Bitcoin is outside the influence of states and is not subject to regulation. It is legally possible to prove that the Bitcoins belong to you only if you prove that you are the sole owner of private keys from the Bitcoin account.
Why would one use multiple addresses? Well, Carol, the reason you would use multiple addresses is primarily for privacy. If you use a single address than every payment you receive and every payment you send can be seen on the blockchain and if you keep using that address presumably all transactions produced by that address are related to you.
You own it therefore you’re making the transactions? If you make one transaction to any kind of company organization etc. That tracks your identity that knows who you are or where you live or something about you/ for example. Let’s say you buy something and they deliver that something to your home. That company knows who you are. You probably typed in your name into the form. Let’s say you bought some cryptocurrency on an exchange and in order to sign up, to that exchange you show them your ID. That company knows who you are. And now they know that that address that you just used belongs to you, and if they know, so does every company that they’re feeding data to which is a lot of companies, and if they know that that address belongs to you now they know that all of the other transactions that were coming and going from that address are your transactions, and they can start pulling apart, and figuring out what the other addresses are. Using a similar process of statistical correlation.
If you use a different address for every transaction may be one of those addresses can be identified to you. But it’s much muchharder to identify all of the addresses and connect them to you. Again it depends on how well your wallet manages security and privacy some wallets are better than others. And there’s some very interesting tricks that you can do to uncover these patterns of spending. But Bitcoin isn’t anonymous so you have to be very careful.
Using multiple addresses is one way you can protect your privacy at least at the very least. from a casual observer someone who is simply clicking through on blockchain info and at various addresses. If I expose my transaction ID to someone. then they can see all my transactions. How does this provide meat privacy? Well, it doesn’t. If you show a transaction ID to someone they can see which addresses were involved in that transaction and depending on whether you’re the sender or recipient they can look at the sender or recipient addresses and then figure out that those belong to you. And then follow other transactions that have happened involving those addresses. If you want privacy the best way to achieve that is to ensure that you do only one transaction per address. You don’t have address reuse now that’s not easy to do.
And you would have to have a wallet that supports. That by generating a new address for every transaction. And also has some other important privacy features for making sure that it doesn’t change one address with another address.
So, using two addresses simultaneously in a transaction relates them in such a way that it shows people that those addresses belong to the same person. So, that’s not good. For privacy and you have to look more carefully at what wallets do under the covers when they construct transactions.
That leads nicely into the next question:
Paavo asks: ”Which wallets have the best privacy features?” Well, Paavo actually there is an annual review and survey of privacy. And I think we can find. I believe it’s called the Bitcoin open
privacy project and let me see if I can find a link to that. And every year that project looks at looks at various wallets and scores them for privacy. I was actually one of the contributors to that project. You can find it at open Bitcoin privacy project dot o-r-g open Bitcoin privacy project dot o-r-g OB P P and it scores various wallets for the level of privacy that they offer users looking at various aspects of the wallet whether the wallets mix addresses together. How they handle change addresses. How they order outputs within the transaction so that it’s not easy to determine which of the outputs is a change address. Whether they use. Whether they leave various signatures within the transaction that can identify which wallet was used and all kinds of things like that.
So yes some wallets have better privacy features than others. I am not sure who the winner of last year was. I can tell you that. I use samurai wallet for privacy it has some excellent privacy features but there are many other wallets that offer privacy. So, you can look at some of that.