A big mistake that persists is the reuse of bitcoin addresses to receive funds. While it’s so easy not to…
Bitcoin addresses
Reusing a Bitcoin address is the easiest way to reveal way too much information.
A little reminder about the addresses:
A bitcoin address is nothing but a public key encoding. Bitcoin transactions rely on public key cryptography. A wallet is used to generate private keys corresponding to public keys.
Public keys are encoded into addresses for added security and convenience. Addresses are indeed much shorter than public keys. An address takes the form of 26 to 35 characters.
[Notre article sur les adresses : Comment les adresses Bitcoin sont-elles créées ?]
Addresses are used to accept payment. During a transaction, the BTC (a number) pass from one address (of a public key) to another.
An address is reused when it has been used more than once to receive payment. What not to do.
For what ?
First, Bitcoin transactions are public. It is possible from an address to trace the thread to the very first address used when creating the BTCs in question. BTCs are created with each block to reward miners.
Anyone can consult the incoming and outgoing transactions associated with an address thanks to an explorer.
However, the only information obtained is the amount of bitcoin that has passed to an address. This is due to the pseudonymous nature of bitcoin addresses. Addresses are not linked to actual identities.
An entity knowing who you are will however be able to consult all the transactions associated with the address that you have used to carry out a transaction with it. Typically: exchanges…
Hence the need to change address for each transaction. A person making the mistake of always using the same address will reveal all of:
-His bitcoin savings
-His transaction history
It is therefore better to use different addresses for each payment received. It’s like having accounts in hundreds of different banks. No one knows your true fortune.
Censorship
Today, wallets can generate almost infinite addresses. A single “seed” (the 12 words) is enough to store millions of private/public keys.
[Notre article sur la seed : Bitcoin – Comment la SEED est-elle créée ?]
Addresses are meant to be disposable. They should only be used once. Otherwise, you will reveal your entire transaction history at once to those who know your identity.
If you own several bitcoins, then you put yourself at risk of being robbed or kidnapped.
There is also a risk of censorship. For example, an address that has funded activists (wikileaks for example) can end up on a blacklist.
The risk being that the exchanges refuse the BTC associated with this address. BTC are then no longer so easily convertible into national currency.
Worse, a dictatorship could commission a monitoring company like Chainalysis to link your BTC address to your identity.
It is easy for a monitoring firm, from your BTC address, to generate a graph of entities you transact with, observe where your money goes and who you receive it from.
Good news, the number of addresses linked to BTC has just broken a record:
Another good news: it is possible to re-anonymize your BTC thanks to spouses.
Coinjoin
Simply put, a consort is a mega transaction to prevent surveillance firms from knowing what addresses your bitcoins are on.
The process is extremely simple. Simply combine multiple UTXOs from multiple users within a single transaction.
[Notre article sur les UTXO : UTXO et privacy]
UTXOs are the scripts (pieces of code) that link BTCs to addresses. During a transaction, it is possible to choose the numbers of UTXOs brought as input and the number of UTXOs that will result.
During a coinjoin, hundreds of people contribute UTXOs and provide even more blank addresses to receive those new UTXOs. It is then impossible to know which is which.
Coinjoin process (which you can do on Wasabi wallets, Trezor (model T) and Samurai):
1) Registration of entries [Les entrées sont les UTXO qui seront utilisés dans le coinjoin].
2) Record outputs [Plusieurs UTXO contenant la même quantité de BTC sont reliés aux adresses vierges fournies pour récupérer ses BTC associés à de nouvelles adresses].
3) Creation of the coinjoin transaction by a “coordinator”.
4) Signature of the transaction [chacun des centaines de participants signe ses UTXO dont ils ne perdent à aucun moment le contrôle].
5) Diffusion of the transaction [la transaction est diffusée au réseau Bitcoin pour qu’un mineur l’insère dans un bloc]
It is crucial to perform coinjoins regularly in order to cover their tracks and ensure that no one can know for sure how much BTC you have.
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