privacy re: transactions

[1dullgeek]

Ok. So I just finished reading "Mastering Bitcoin". And I'm a little confused about transaction privacy.

I understand that I should always use a new bitcoin address every time that I receive or send bitcoin. I think I understand the reason: because if I pay my rent using the same bitcoin address that I use to receive my salary, my landlord could go to the blockchain and see how much money I receive into that address and thus change my rent accordingly.

But I'm a little confused as to how my landlord isn't able to know this even if I use a new bitcoin address.

When I send bitcoin to my landlord, my landlord can be confident that I'm not double spending some money because his wallet can trace back the origin of the of the money I sent and verify that it's not already been spent. As I understand it, the whole beauty of bitcoin is that anyone can trace back all transactions to the coinbase that created them to confirm that double spending hasn't occurred. This is one of the functions of being a node on the network.

Well if that's true, can't my landlord trace back the transaction chain one level deeper to see how much was sent to me? If I pay my landlord with bitcoin that came to me via my salary, then isn't my landlord going to be able to see my salary amount from the previous transaction in the chain?

Even if all new addresses are used in my next paycheck:

a) from my employer
b) to me
c) from me
d) to my landlord

Can't my landlord just simply trace back one transaction to see how I received that bitcoin, and then make some assumptions about my salary?

I must be missing something. Am I missing something?

[1715544346]

1715544346

[VirosaGITS]

Ok. So I just finished reading "Mastering Bitcoin". And I'm a little confused about transaction privacy.

I understand that I should always use a new bitcoin address every time that I receive or send bitcoin. I think I understand the reason: because if I pay my rent using the same bitcoin address that I use to receive my salary, my landlord could go to the blockchain and see how much money I receive into that address and thus change my rent accordingly.

But I'm a little confused as to how my landlord isn't able to know this even if I use a new bitcoin address.

When I send bitcoin to my landlord, my landlord can be confident that I'm not double spending some money because his wallet can trace back the origin of the of the money I sent and verify that it's not already been spent. As I understand it, the whole beauty of bitcoin is that anyone can trace back all transactions to the coinbase that created them to confirm that double spending hasn't occurred. This is one of the functions of being a node on the network.

Well if that's true, can't my landlord trace back the transaction chain one level deeper to see how much was sent to me? If I pay my landlord with bitcoin that came to me via my salary, then isn't my landlord going to be able to see my salary amount from the previous transaction in the chain?

Even if all new addresses are used in my next paycheck:

a) from my employer
b) to me
c) from me
d) to my landlord

Can't my landlord just simply trace back one transaction to see how I received that bitcoin, and then make some assumptions about my salary?

I must be missing something. Am I missing something?

First, that double spending crap is nonsense you're going way too back into this. You can't double spend BTC to pay your rent anyways. If you send him rent and then double spend him, he is simply not going to receive the BTC in the first place so it would be the same as not having paid rent at all.

Second. Yes, you will need to send the rent to a webwallet and later send it to your landlord, i assume there are high odds that the source will be obfuscated in the tons of TX's . It is possible even not being your BTC in the first place.

The other thing you can do is sell the BTC and pay him in Cash.

[1dullgeek]

I must not have stated my question clearly. I'm interested in knowing whether or not my landlord can traceback the coins that I sent him/her and then use that traceback to determine how much I was paid by my employer.

I'm trying to ask theoretical question about bitcoin transaction traceability and what it reveals about me as someone who transacts in bitcoin.

[DannyHamilton]

Using unique addresses has more to do with protecting your privacy from those that are sending bitcoins to you than those that are receiving bitcoins from you.

If your landlord uses a single address to receive all rent payments, then you'll be able to look at that address and see if anyone else is paying less rent than you.  If the landord uses a unique address for every rent payment, then you won't know what any of the other renters are paying since you won't know what addresses they are paying to.

Protecting your privacy from those that are receiving bitcoins from you requires you to either use a service that manages the wallet for you (such as coinbase) or put some effort into the process yourself.

Lets say your employer uses three of their 0.7 BTC outputs to pay you a salary of 2 BTC (sending 0.1 BTC back to a new address of their own as change). You could then generate two new addresses and send 1 BTC to each address.  Now if your rent is 0.95 BTC, you could pay it with one of your 1 BTC outputs.

Your landlord won't know if:

• Your salary is the 1 BTC output (paid to you by your employer with one of their 2 BTC outputs)
• Your salary is the 2 BTC output (paid to you by your employer with three of their 0.7 BTC outputs)
• Your salary is 0.7 BTC and you joined three of them into 2 BTC of change to yourself when you made a 0.1 BTC payment to some merchant(And then later made a 1 BTC payment to another merchant leaving 1 BTC available to pay the rent)

[1dullgeek]

Ahh... thank you. That makes sense.