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Comment by elif

13 hours ago

What you quoted is regarding the use of a SERIES of single use wallets. What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?

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elif

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moduspol  13 hours ago

The quote is "single-use wallets, addresses, or accounts." If you download any normal Bitcoin wallet today, it'll use a series of words to derive a series of private keys that are used by the wallet. Each one gets a different address.

Then your wallet software is smart enough to treat all the addresses derived as a single wallet. When you go to make a payment, it makes it from the various addresses owned by the wallet. When you want to accept money, you can generate the next address in the series and give a fresh address to someone new.

The net result is that it's not clear from someone looking at the blockchain which addresses actually belong to YOUR wallet and which transactions are you sending money to someone else or yourself.

AFAIK this is how basically all Bitcoin wallets have worked for years. Electrum and Base (formerly bread wallet) as well as Ledger's wallet are the main ones I've used.

EDIT: Just to address this:

> What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?

It makes it so that someone publicly looking at the blockchain can't provably tell how much Bitcoin you have.

We still have to give addresses to people to receive money, so if we were only allowed to have a few, it wouldn't be hard to trace which people own which wallets. And then now you've got a big physical security risk because the world can see how much money you are able to give if they invade your home, kidnap a family member, etc. It'd be like having to put a sign out in front of your house that says, "$600,000 in cash is in here." And they could see the cash.

  • Ajedi32  13 hours ago

    Doesn't that result in multiple transactions/transaction fees if you ever need to spend more than a single wallet contains?

    • moduspol  13 hours ago

      A transaction can have multiple inputs and outputs, and with these Bitcoin wallets, they always do. Pretty much any transaction you make is going to look like it's going to at least two places: the actual intended recipient for the amount you wanted to send, and another (probably new) address that you control. The inputs could be from a single one of your addresses or multiple.

      Yes, it does result in larger transaction sizes, and transaction sizes are used to calculate fees. In practice, my understanding is that the relative increase in size is not a big deal, but again, this is how pretty much all of them work.

jrmg  13 hours ago

People are interpreting the ‘and’ here as meaning ‘either of these things’ rather than ‘these things in sequence’ as you (and I) do.