Topic: Why use a new address? (Read 565 times)

Sorry about that.  I answer so many technical questions about how the process actually works, that I forget sometimes that someone might just be looking for a description of the user interface.

Note that the user interface will be different for different wallets.  If you are running the Bitcoin-Qt reference wallet, then your description matches pretty well.

The Bitcoin-Qt wallet program will take care of hiding most of the technical aspects from you.

A wallet can have MANY bitcoin addresses, and the Bitcoin-Qt wallet will display a single total balance the is the sum of all the unspent bitcoins that have been received at any of the bitcoin addresses that the wallet is keeping track of for you.  The wallet will create addresses of its own that it won't tell you about ("change" addresses) and will keep track of bitcoins that it sends to those addresses as well.  You can generate a new address for every sender or even for every transaction.

When you send bitcoins, you don't choose where the bitcoins come from, the wallet takes care of that and then reduces the balance that it displays by the amount that it has sent.

It is important to create a backup of your wallet on a regular basis.  That way if your computer dies or is destroyed, you'll be able to recover access to your bitcoins.

oh.. ok.. thanks for that

but... in standerd user terms....  what the standerd user will experiance.... is there is one money pool for your wallet that is linked to all your adresses...  money comming in or out appears or dissapers from that pool, regardless of adresses used.

that is what the standerd user will experiance... and see.... even if thats not what actualy happens.

That's not entirely true.  It comes from individual transaction outputs.  However, the wallet doesn't let you choose which outputs to spend in the transaction you are creating.  The wallet has its own algorithm for determining which previously received outputs to use as inputs.

it was at first to me also... but experiance is key... its actualy fairly easy to understand once you see it with your own eyes.

if you have an question.. ill try to awnser them

you cant transfer BTC between 2 adresses on the same wallet... the BTC that gets sent to you all goes to the same place, as long as its the same wallet... no matter how many adresses you have on that wallet.

1 wallet... 1 money pool...  as many adresses as you want for that wallet to recieve BTC.

when you send BTC to someone elses adress... it comes out of your money pool on that wallet... not an individual adressee.

Hmm.. this seems confusing.

What I meant was create a new address, transfer BTC between wallet addresses and send BTC.

You don't choose the address that you are sending to.  The recipient chooses the address that they are receiving at.  You have to send to the address supplied by the recipient for the them to receive the bitcoins.

There is also a security reason for using a new address for every transaction.

When you receive bitcoins at a brand new (never before used) address, the private key is protected from the bitcoin address by three algorithms: ECDSA, SHA-256, and RIPEMD-160.

As soon as you send bitcoins that were received at an address the public key becomes available in the blockchain, and the private key is only protected from the public key by ECDSA.

At the moment this is plenty of protection.  There is currently no known feasible way to reverse ECDSA and figure out the private key from the public key.  However, with a previously unused address a flaw would have to be discovered in all three algorithms nearly simultaneously, which is extremely unlikely and would allow time for bitcoin to implement a replacement function and time for you to move your coins to the new functionality.  If you re-use addresses, then a flaw would only have to be discovered in the future in ECDSA for someone to potentially be able to access your bitcoins.

there are 2 reasons people say change your bitcoin address.


1. it helps make it harder to tell who you are... since your bitcoin adresse you give out keeps changing.

2. it helps you keep track of were you bitcoins are coming from.

* i have one bitcoin addresse i gave to my freind tom... when tom pays me.. i know it is him paying me.. becuase the bitcoin adresse i gave to him is were my money is coming from.

* i gave another bitcoin adresse to sally... when sally pays me... the bitcoins will she sent me will show up linked to that adresse.

this lets me tell how much tom and sally gave me each..... otherwise i would have to ask them what time they sent the money... and try to figure out who gave me what and when.

........


you can have as many adresses as you want.... any money you recieve will all go to the same place... you will simply be able to figure out who gave you what and when better if you have and label more then 1 adresse.

you CAN use the same adress for everything... but it makes it more easy to tell who you are.. and if you have alot of people sending you bitcoins it might get confusing as to who sent you what and when.

I've heard ppl should use a new address every time they receive coin to help anonymity. Should you use a new address every time you send? Can you just use the same address for everything? Thanks!