This Well-Known Bitcoin Privacy Flaw Is Still Found in 54% of Transactions

what happens bitcoin address reuse

When one is first introduced to Bitcoin, a bank account number is often used as an analogy for a Bitcoin address. Then you hear that it is bad to use the same Bitcoin address for all your transactions. I was asked by three different people something along the lines of. If I give the same bank account number to different people who want to pay me, why do I need to give out different Bitcoin addresses to different people? The short answer is: Address reuse is bad for privacy and potentially security under certain circumstances.

Scenario: My salary is paid in Bitcoin reality. I use a single Bitcoin address for everything fictional. You and I are friends fictional, obviously.

The story: Say we have a good time hanging out in a bar. Later you want to pay me back. I give you my one and only Bitcoin address to receive payment. You send some coins to it. You want to check if the transaction is confirmed. You look it up on blockchain. While you are at it, you click on the address, noticing that every month on the first day I receive the same amount of bitcoins. Explanation: It comes down to the fact that all Bitcoin transactions are public.

Given an address, anyone can look up transactions ever sent to and from this address. This is where the bank account number analogy breaks down, because the transaction history of a bank account is private by default.

Scenario: Your operation system has a weakass random number generator fictional-ish, at some point it was true for Android. You use a single Bitcoin address for everything fictional, I hope.

Some smartpants figures out your private key by staring at your two transactions for long enough. You lost all your bitcoins. Explanation: Every time you send some coins, a transaction is created and signed with your private key that corresponds to your Bitcoin address. A random number generator is involved to add some randomness to your signature because that makes it secure according to mathematics.

By having a single Bitcoin address, all transactions you ever make are signed with the same private key. By using different addresses as the source of funds for every transaction, you avoid signing more than one transaction with the same private key. So even with a bad random number generator, the vulnerability described above no longer applies. I was asked by three different people something along the lines of If I give the same bank account number to different people who want to pay me, why do I need to give out different Bitcoin addresses to different people?

Privacy Scenario: My salary is paid in Bitcoin reality. Security Scenario: Your operation system has a weakass random number generator fictional-ish, at some point it was true for Android.

There you have it, why reusing Bitcoin addresses is bad. Until next time, Vires in Numeris. Please enable JavaScript to view the comments powered by Disqus.

what happens bitcoin address reuse

Bitcoin Address Reuse

Once miners unearth 21 million Bitcoins, that will be the total number of Bitcoins that will ever exist. Bitcoins can be lost due to irrecoverable passwords, forgotten wallets from when Bitcoin was worth little, from hardware failure or because of the death of the bitcoin owner. This is a pretty important concept to understand in order to fully understand when the last Bitcoin will be mined. Originally, 50 bitcoins were earned as a reward for mining a block. Then it dropped 25 bitcoins, and then to So if we do the math, if there is a halving event every four years, the last Bitcoin should be mined sometime in the year Will the whole system shut down because Bitcoins are no longer awarded for mining new blocks? Probably not. Bitcoin miners are also awarded transaction fees, and these fees should keep Bitcoin afloat.

what happens bitcoin address reuse

GitHub is home to over 40 million developers working together to host and review code, manage projects, bitclin build software. Have a question about this project?

Sign up for a free GitHub account to open an issue and contact its maintainers and the community. Already on GitHub? Sign in to your account. This is proposal in reaction to current Bitfinex hack. Happebs has hhappens pattern as previous BitStamp hack. The most damages are made by other parties sending their bitcoins to the compromised addresses after hack has been discovered and confirmed.

This proposal introduces new message being broadcast through the network with list of addresses to put on a blacklist.

To put address on the blacklist requires to have the private key. Every address on the list must contain correct signature and expiration of the blocking.

This won't haopens. This is in effect sending cash to someone, then taking it back and throwing reus into a fire. It is about blocking my address because it has been compromised and Bitcoiin want to prevenent other parties to send bitcoins to that compromised address.

Blocking is one way action, so neither me nor hacker can remove blocking before expiration. Reply to this email directly or view it on GitHub comment. Attacker sends payment to merchant, with change going to change address. Attacker then reports the change address as compromised, to adcress to prevent happes payment from going. Attacker generates an endless stream of addresses, reports them as compromised to try to flood the network.

This doesn't solve the ripoff-merchants-accepting-unconfirmed-payments issue, but it should solve the network flood issue. The core problem is that "compromised" and "I regret sending that" are sufficiently, dangerously close enough to create some DoS situations.

It is about blocking target address. You want to avoid to receive not spend. You presumably need to give whar a new one. First hack to BitStamp continued after the BitStamp published alert, because a lot of senders reused the address and did not received the alert. The same situation with BitFinex. Hack has been discovered when there were BTC sweeped our from the hotwallet. After 3 hours, hack address collected BTC.

Address reuse is not only issue for this case. My idea is mitigate the damage made by the attack. Yes, Bitfinex can state, that any transfers made after announcement will not refunded. But Bitfinex cannot do this, because happena transfers was made to addresses generated by the Bitfinex and user is not obliged to be always online.

Bitfinex will have to refund this loss, so happene still increases the damage. The idea haopens require any special change in the Bitcoin protocol. This idea will work only if majority of bitcoin users will accept it.

I know, that there are some possible ways, how to abuse this biycoin - as someone pointed out that it can be used to block unconfirmed transactions. But there is already way to block unconfirmed transaction. Someone can try to double-spend the transaction with the same effect. It still doesn't render the idea invalid. We can just put this feature at the same level as double-spending and problem is solved.

I just drew the idea. You should to improve sddress idea, not finding the difficulties to throw it away. Bitcoin needs lot of user-protecting reusr and this is one of. Otherwise, it will not widely accepted by the public. It was after the Bitfinex did already know hotwallet was compromised.

Unfortunately, this was not known by the friend. Oh well, your idea isn't viable. You simply can't expect every bitcoin user to track a list of compromised keys for you This is not an argument. Anyway, if this could be a problem, there can be some implicit or explicit expiration.

Feel free to patch your own node to implement blacklisting behavior. However this project will remain neutral as to maximize overall fungibility of bitcoin, and not merge such functionality.

Haappens sorry about what incompetence appears. You have rejected the proposal without any analysis or any argument. I'm afraid that we have a long way to accepting Bitcoin general public. It'll be difficult without instruments to protect its users.

I cannot see how the fungibility of bitcoin is interfered with an option for the owner of a bitcoin address to retire it, so it cannot accept futher funding. Ondra, Petr: lets imagine, it is happenss in the bitcoin. It must be stored somewhere where?

And now imagine someone else being an attacker and wanting to DoS the network. So they will start at private key 1 and start network flooding This particular problem can be partially solved by the fee on these lock translations if the lock addrrss being done as a transaction of some special kind.

And there are other problems I can think of - do you see them? Do you have a solution for them? It is not about incompetence, but about the visionary - people here see a bit more than you. In this case much more than you. People here are not obliged to finish your ideas. If you want something to happen, just work on it, create proposal, send it to the development list for discussion.

In this particular case, the whole principle of "deposit to some address" needs afdress be reworked from the exchanges side IMO. What you're trying to do is use the p2p protocol to broadcast information to senders, so they do not send coins to those addresses anymore. It solves all issues. It also requires to spend an ouput not connected with the address.

Fees will solve this issue, as it solves potential transaction DoS, Lightweight clients uses gateway to broadcast transaction so that gateway can hold blacklist it still must reject double spends and duplicated transactions.

SPV clients can ask nearest node whether addresses are revoked. It also need happejs be accepted by majority, however bitcoin core is reference client, it has very easy position for accepting new standardts. I cannot write BIPS. Of course anyone go here likes this idea can write it. I am just sharing the idea. Bitcoun, if you make it a consensus rule, that problem is solved.

However, doing such a softfork requires a majority of hashpower to agree with your change, which is potentially uneconomical for. It still requires wallets to deal with non-confirming transactions to such addresses, and it's much more fundamentally solved by informing the sender not to create such a transaction in the first place. As per addrewsyou're now making it a consensus rule, requiring it to be stored by all full nodes what is 1654 worth a fast lookup table using potentially unbounded fast memory as well, in addition to the UTXO set.

That's one way to implement the reuwe fork, but now you're not only changing the P2P protocol, but also the network consensus rules, so you will absolutely need to take this discussion to a larger audience than one client. I understand you're reusf trying to convince biitcoin that a problem exists and must be solved by othersbut for this kind of problem, this is really not the place.

I'm not suggesting to outlaw send to address entirely, those have their uses, but for the vast majority of your use cases, you already have the receiver online. And ultimately, this is just about informing senders to not send somewhere either by broadcast messages, by asking a full node through P2P, or by seeing their transactions not confirm in time.

It is vastly more efficient to just tell them, than imposing the cost of distributing and maintaining a blacklist by every full node in the network. Furthermore, negotiating transactions as done by BIP70 also has other advantages such as being able to identify receivers, communicating refund addresses, sending memo messages, and better privacy through reducing address reuse. If you don't want to write a BIP or at more info start wat the perceived problem on the mailing list, that's fine, but don't expect the contributors to one client to start advocating your proposed solutions to.

Sorry for closing so brusquely, it seems I misunderstood. I read this as Yet Another Proposal to limit spending from outputs that are marked as stolen. There are, indeed, no fungibility issues with disallowing spends to an address.

Your proposal is would be best implemented as a whaf address blacklist coordinated between wallets. This could have some use, whether the coordination happens over the P2P protocol or not.

But take the discussion to the mailing list, this is not the right place for high-level proposals. Skip eeuse content. Watch 3. Dismiss Join GitHub today GitHub is home to over 40 million developers working together to host and review code, manage projects, and build software. Sign up.

What if Bitcoin Loses its Miners

Et voila! It is much more useful for a client to display transaction outputs spendable than address balances for this reason. Even if you spend reuuse the bitcoins claimed by this private key at once, it is still possible to double-spend them in theft before they confirm. Given an address, anyone can look up transactions ever sent to and from this address. Once that payment is made, the receiving party has no reason to retain the data for the address technical details simplified and may discard it. Anyone who is actively monitoring the bitcoin blockchain to link bitcion to transactions will pounce on such opportunities with relative ease. Data shared by LaurentMT appears to support this hypothesis. Scenario: My salary is paid in Bitcoin reality. Address reuse, at this layer, requires producing multiple digital signatures when you spend bitcoins. You want to check what happens bitcoin address reuse the transaction is confirmed. This is a design choice decided by Satoshi Nakamoto, geared towards protecting the the privacy of Bitcoin users by removing the ability to link transactions to each. WebSockets for fun and profit.

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