Bitcoin Forum

I'm planing of using the Bitwage service in order to earn bitcoin. And I'm looking at what I can do to enhance my privacy.
They support (extended) xpubkey: https://blog.bitwage.com/2015/08/24/increasing-your-privacy-bitwage-releases-address-list-payout-option/

But I'm confused. In which sense that gives me privacy ?

Can someone explain me? I'm aware that I provide KYC to Bitwage, so it's known that I earn bitcoin and how much, but is it possible to hide on which addresses are my bitcoin located?

They are talking about privacy from third parties as opposed to privacy from Bitwage.

If you are being paid by Bitwage, then they obviously know who you are and how much they are paying you. They also know the address(es) that they are paying in to belong to you. What they don't know is all the other addresses in your wallet which you might use for receiving coins from elsewhere. If you give them your xpub, then they can now see every address in your wallet, including ones they aren't using, and know exactly how much bitcoin you have received from elsewhere.

However, if you give Bitwage a single address, and someone else has linked that address to you, then they know exactly how much you are being paid and when. If Bitwage had your xpub, they could send your wage to a different address you own each time, which would increase your privacy from third parties.

Bitwage don't accept xpubs though. What they do accept is a list of bitcoin addresses. This prevents them from seeing all your addresses via your xpub, and also prevents them paying in to the same address every time.

Ok, I see now. So it only prevents leaking information to outside but the other part still knows everything.

Btw, I think they do support xpubs https://blog.bitwage.com/2015/12/06/new-extended-public-key-import-for-convenient-payroll-privacy/ or it isn't that?

I guess that's my best option to earn bitcoin easily and at low cost (1% of total transferred).

keep in mind that only non-hardened public keys can be derived from an extended public key and not the hardened ones. for them you still need the extended private key. additionally the derivation path needs to be communicated beforehand if the master key is being transferred since without knowing the path you can end up with a different set of keys. so if you plan on using this you may want to keep that in mind.

there is also another risk involved with sharing the master public key like this which is if some day one of your private keys were revealed all your private keys will be revealed from that single key.

Essentially, yes.

No, you're right. My comment above was based on the initial blog post you linked where they said they didn't support it, but I guess that blog post is out of date and they do support xpubs now.

If it were me, I would probably create a new wallet just for Bitwage and give them the xpub. They can then send to a new address every time, which stops any third parties monitoring how much you are being paid, and I would use different wallets entirely for all my other bitcoin activities, which stops Bitwage from seeing everything else you are doing via your xpub.

That's addressed in the second link OP shared. They use m/0/0 for the first address, and simply increment by 1 from there.

Understood. So I will create a cold wallet only for Bitwage and later on I will "mix" the funds and transfer them to a private wallet. 

Thanks guys.

They claim that it is also compatible with Trezor, Ledger and KeepKey extended public keys... so it doesn't sound like they're doing anything out of the ordinary as far as derivation paths are concerned.


Yes, that would be a good strategy... a wallet only for Bitwage... and then later you can utilise Mixers or CoinJoin etc, to be able to get the funds into a private wallet in a way that should effectively obscure the links between all the funds (at least from the average person).