Need help understanding proper address usage for a vanity keychain

[bloss]

I'm contemplating obtaining a physical bitcoin QR code address such as this idea:
http://imgur.com/a/dHSCB
or this commercially available process:
http://www.plaquemaker.com/Titanium/Titanium-Tags.html

Before I pull the trigger on one of these kinds of solutions, I need to better understand how to use the address correctly.  My understanding is that when BTC is used from an address, then the address should not be used anymore for security reasons.  If that is the case, then using a single address to receive funds is confusing to me.

I prefer to use Coinbase to handle my spending BTCs.  If I use a single address to receive funds within Coinbase, and that money is spent later, will the original address still be safe to use?  Will Coinbase automatically handle that address safety?

Are there any other considerations I should understand before I spend money making a physical QR code address?

Thanks

[drmadison]

So I'm 90% sure the following is true:

When you receive funds into your wallet the address is part of that transaction. When you later pay out, the transaction you create references the various transactions you received to get the funds. This is why if you receive a lot of small (say, 0.01btc) transfers and then pay out say 0.5 your transaction size is bigger because it includes references to those 50 transactions it took to make that 0.5.

Every transaction is fully tracked. You can't receive funds with one address and send from another because the network doesn't think that other address has any money.

[Rannasha]

Before I pull the trigger on one of these kinds of solutions, I need to better understand how to use the address correctly.  My understanding is that when BTC is used from an address, then the address should not be used anymore for security reasons.  If that is the case, then using a single address to receive funds is confusing to me.

Spending money from an address lowers the security of that address. But this difference is rather theoretical. A bitcoin address is basically a hash of the public key, which is derived from the private key, which is needed to spend coins. Both steps to go from private key to public key and from public key to address use cryptographic functions that are designed to be irreversible. When you spend coins, the public key of the address is revealed and included in the blockchain. If the functions that derive a public key from a private key are broken, this might allow an attacker to obtain the private key, whereas if the address is never used, the function that turns a public key into an address needs to be broken as well.

Since the functions used are widely used and well-tested, this difference is rather academic. For normal purposes, there is no problem using the same address repeatedly. Note that this does make it easier for others to track your Bitcoin-activity. Whether this is an issue for you, is up to you to decide.

I prefer to use Coinbase to handle my spending BTCs.  If I use a single address to receive funds within Coinbase, and that money is spent later, will the original address still be safe to use?  Will Coinbase automatically handle that address safety?

Does Coinbase guarantee that your deposit-address will remain available forever? If so, it should be fine. Personally, I wouldn't use an online wallet for Bitcoin-storage, but that's a matter of opinion.

Are there any other considerations I should understand before I spend money making a physical QR code address?

I would only order such a gadget for an address I control, not an address linked to an online wallet. Bitcoin-websites have the tendency to shut down out of nowhere from time to time and this would render your physical QR code useless.

[Abdussamad]

I'm contemplating obtaining a physical bitcoin QR code address such as this idea:
http://imgur.com/a/dHSCB
or this commercially available process:
http://www.plaquemaker.com/Titanium/Titanium-Tags.html

Before I pull the trigger on one of these kinds of solutions, I need to better understand how to use the address correctly.  My understanding is that when BTC is used from an address, then the address should not be used anymore for security reasons.  If that is the case, then using a single address to receive funds is confusing to me.

I prefer to use Coinbase to handle my spending BTCs.  If I use a single address to receive funds within Coinbase, and that money is spent later, will the original address still be safe to use?  Will Coinbase automatically handle that address safety?

Are there any other considerations I should understand before I spend money making a physical QR code address?

Thanks

Address reuse is bad for the following reasons:

- Security is lowered slightly.

- Your privacy takes a massive hit. Remember all bitcoin transactions are public information. If you reuse the same address over and over again everyone can tell how much money you are receiving and spending.

So IMO making a physical QR code is a bad idea if it encourages you to reuse addresses. And don't even think about using an address that belongs to coinbase. There are so many things that could go wrong with that. What are you going to do if coinbase shuts down? Or gets hacked? What if you need to prove ownership of the address by signing a message?

The way I see it in future the payments gateway that the bitcoin-qt team is developing will solve this problem for you. Maybe then you'll have a URL or something that you can safely share with people without loosing out on privacy.

[bloss]

- Your privacy takes a massive hit. Remember all bitcoin transactions are public information. If you reuse the same address over and over again everyone can tell how much money you are receiving and spending.

This aspect does not concern me as much as it should, but I understand the point.

So IMO making a physical QR code is a bad idea if it encourages you to reuse addresses. And don't even think about using an address that belongs to coinbase. There are so many things that could go wrong with that. What are you going to do if coinbase shuts down? Or gets hacked? What if you need to prove ownership of the address by signing a message?

Agreed, this is a risk.  However, I would not plan on keeping much BTC in Coinbase's system -- I would only use it for transactional activity.  The rest I would put in cold storage in paper wallets.  Coinbase does allow proof of ownership by signing a message.  (I have never done it, but I do see that option in the "addresses" screen.)

Thanks

[Abdussamad]

Another thing you should know is that the slight security risk I talked about can turn into a major problem in certain situations. The android and blockchain.info RNG bugs, for example, only hit addresses that were reused.