Deterministic Wallets - Reading Assignment

Read a Bitcointalk thread by the legendary gmaxwell on new types of Bitcoin wallets. Answer the questions and post them below:

https://bitcointalk.org/index.php?topic=19137.0

  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?)
  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_private_key, but still generate new addresses with
    Publickey(type,n) = Master_public_key + H(n|S|type)*point.
  2. Public addresses are changeable after every transaction
1 Like
  1. 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. 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. Public addresses are changeable after every transaction
1 Like

It is a wallet that can be backed up once and stays backed up as all future addresses are determined in advance. It can also be stripped down to a small size so it can be backed up on paper as well.

You can separately secure the Master Key.

No access to the Private Keys

1 Like
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    All the keys are derived from a “single master private key”, so you can backup once and stay backed up forever.
    HD wallets offer two major advantages over random (nondeterministic) keys:
    First, the tree structure can be used to express additional organizational meaning, with a specific branch of subkeys for specific use.
    Second, users can create a sequence of public keys without having access to the corresponding private keys. This allows HD wallets to be used on an insecure server or in a receive-only capacity, issuing a different public key for each transaction.

  2. What advantage does a Type-2 wallet have over Type-1?
    You can share S (random seed) to derive (public) keys and still be protected by the de Master private key in order to not loose your funds.

  3. What is the anonymity set for a receiver using a Deterministic Wallet?
    One, because there is only one receiver, although it can generate multiple private/public key pairs.

1 Like
  • What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    In a deterministic wallet you can backup once and it stays backed up forever because all future addresses are determined. This is in contrast to the non-determinstic wallets where the keys are random but are precomputed ahead.

  • What advantage does a Type-2 wallet have over Type-1?
    In the second type we can secure separately the parent private key mantaining the ability of still generating new addresses from it.

  • What is the anonymity set for a receiver using a Deterministic Wallet?
    To my understanding the anonimity set is one as one is the reciever, but he can change address after every transaction.

1 Like
  1. It is a type of wallet which can be backed up once and stays backed up forever, since all possible future addresses are already determined. It is possible to strip it down to a small size, such that it could be stored on paper in the form of a QR code, for example.
  2. A Type-2 wallet works in the same way as a Type-1 wallet, but it can store in a secure way the Master Private Key of the wallet while generating public keys that would allow greater security by making it impossible to find out the original private key.
  3. It would be possible to use different public keys for different transactions, if I understood it correctly in this case the anonimity set would be equal to the number of public keys pre-determined and associated to the wallet. @Grant_Hawkins is it correct?
1 Like
  • What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    A deterministic wallet is 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). 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?
    Public addresses are changeable after every transaction

1 Like

Re: ANONYMITY SET

If Alice sends BTC to Bob, and Bob gives a fresh address (from his deterministic wallet), what is his anonymity set? How many people could Alice have sent BTC to?

Bob is now just a random address, so the receiver could be anyone, so anonymity set = the set of all Bitcoin users whose address is unknown.

@donald77
@harry

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

It’s easier to backup a single deterministic wallet (one seed phrase to backup) opposed to backup many key/pairs (private key + public key). Also, a deterministic wallet can easily regenerate all the keys.

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

In both cases, keys can be regenerated, but the type-1 wallet must generate e.g. a thousand of 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.

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

The receiver has a very large anonymity set, as he can use a new address for every new transaction. The only problem is when he spends the funds it may be possible to link those addresses together.

2 Likes
  1. 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. Type-2 wallet can separately secure the Master Key.
  3. Public addresses are changeable after every transaction
1 Like
  1. Easier backup of the wallet

  2. The ability to generate addresses without access to private key.

  3. The idea being each transaction has a unique address.

1 Like

1.deterministic wallet i a wallet that you only need to back up once, stays backed up forever because all future addresses are know in advance
2.you can store the master key separately and still generate new public keys
3 very big, all the possible adresses that the wallet could generate, that have not been used

1 Like
  1. One private key allows to generate multiple public keys. So you only need to backup master private key.
  2. New addresses can be generated from master public key without a private key.
  3. As I understand the concept, If the address is never reused, the anonymity set is potentially all unknown bitcoin addresses.
1 Like
  1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
    You need one backup instead of a backup for all single addresses. All used addresses are determined by the wallet.

  2. What advantage does a Type-2 wallet have over Type-1?
    Type 2 needs less storage to backup. Type 1 creates a bunch of address on forehand, while in type 2 you can create new addresses with math.

  3. What is the anonymity set for a receiver using a Deterministic Wallet?
    In every transaction you can make use of a new address while it still is related to your wallet.

1 Like
1. What’s the advantage of using a Deterministic Wallet, as opposed to generating many different keypairs?
	a. you only have to backup one thing to have access to all private keys (e.g. a seed)
2. What advantage does a Type-2 wallet have over Type-1?
	a. it is more secure becaus of an aditional master private key
	b. Once you have create PrivKey(type,n) you can create new addresses without knowing master private key, only with PirvKey(type,n) -> so you can store it seperatly 
3. What is the anonymity set for a receiver using a Deterministic Wallet?
	a. you can create new addresses without backup the new private key - so for each tx you use a automatically created address
1 Like

@Goosie @Daniel_Fuchs @SalJoaNoc Question 3 Anonymity set:

Because it’s a new address with no history, the anonymity set is all unknown users of the blockchain.

3 Likes
  1. 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.

  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. Public addresses are changeable after every transaction

1 Like
  1. A wallet you back up once and for all.
  2. We secure a single private key
  3. @Grant_Hawkins is it the set of all addresses the answer or all predefined ones?
1 Like
  • 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. 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)

  • What advantage does a Type-2 wallet have over Type-1?
    You can separately secure the Master private key, but still generate new addresses

  • What is the anonymity set for a receiver using a Deterministic Wallet?
    In every transaction you can make use of a new address while it still is related to your wallet.

1 Like