Single “Multiple Inputs Tx” vs Multiple “Single Input Tx”

[vijaychavda]

Alice owns three addresses A1, A2, A3. She decides to collect the coins held by these addresses into a single coin so she generates a fresh new address A4 for that.

She has the following two options:

1. Single transaction

Code:

+---------------+
 |A1          A4|
 |A2    ->      |
 |A3            |
 +--------------+

2. Multiple transactions

Code:

+---------------+
 |A1          A4|
 +--------------+

+---------------+
 |A2          A4|
 +--------------+

+---------------+
 |A3          A4|
 +--------------+

She does not want people to know that A1, A2 and A3 are owned by her. And she does not intend to use any mixing services. She also don't mind paying more transaction fees as in option 2.

Option 1

A1, A2 and A3 can be linked together assuming she did not use any Coin Join technique.

Option 2

It can be seen that A4 is reused to receive payments. However A4 has never been seen before this transaction.

Questions on Option 2:

• Can someone observing the Blockchain deterministically figure out A1, A2 and A3 belong to same user?
• If Alice now spends A4 to Bob (sends all amount, she never uses A4 again), can Bob ever figure out that A1, A2 and A3 belonged to Alice?
• What privacy will Alice (or someone down the trail, like Bob) lose if she goes for option 2?
• Is reusing addresses to only receive payments and spending that address only once okay?

[mocacinno]

Here's my take on your 4 questions... It's possible other people will have other opinions tough:

Can someone observing the Blockchain deterministically figure out A1, A2 and A3 belong to same user?
Well... He can't prove A1, A2 and A3 belong to the same user, but if you spend all unspent outputs funding an address to fund a single second address without sending change to a change address, one can assume there's a reasonable chance both addresses belong to the same person... But you will be unable to prove this with 100% certainty.

If Alice now spends A4 to Bob (sends all amount, she never uses A4 again), can Bob ever figure out that A1, A2 and A3 belonged to Alice?
That's actually pretty much the same question as before... He can't prove A1, A2 and A3 belong to Alice, but he can have a very strong indication that this is the case

What privacy will Alice (or someone down the trail, like Bob) lose if she goes for option 2?
That's actually still pretty much the same question... If Alive had to fill a KYC form on an exchange and withdrew her exchanged FIAT to A1, a 3 letter agency will be able to deduce to a certain degree of certainty that both A1n A2, A3 and A4 belong to Alice. It's won't hold during a court case tough.

Is reusing addresses to only receive payments and spending that address only once okay?
It's not only OK, it's strongly recommanded. It makes it harder for other people to analyse the blockchain and increases your privacy AND it makes sure the public key of your address is only known to a thirth party AFTER you've spend the funds funding said address.

[vijaychavda]

Okay, I get it. Regarding your answer to the fourth question, I've read many places that donation or fund-raising addresses should be dynamic, i.e. generate new addresses every time someone requests the donation address. Does that only apply if I were to spend one of the UTXO i received as fund before the fundraising ended (i.e. I stop accepting funds to that address)?

[mocacinno]

Okay, I get it. Regarding your answer to the fourth question, I've read many places that donation or fund-raising addresses should be dynamic, i.e. generate new addresses every time someone requests the donation address. Does that only apply if I were to spend one of the UTXO i received as fund before the fundraising ended (i.e. I stop accepting funds to that address)?

That's actually a pretty good question... From a security point of view, i would say that, yes, as long as you don't spend any unspent outputs from a donation address, the public key isn't known to anybody but you, so it would be safe to re-use a donation address as long as you don't spend any of the unspent outputs funding it. Now, don't freak out if you re-used an address, at the moment it's still secure even IF your public key is known... I re-use my public address all the time (but i don't think i have anything to hide)

If you want to track who donated how much, you'd need to create a fresh address for each donation tough... Also, creating fresh addresses would allow you to spend some of the donated funds while leaving the rest untouched, while increasing the pseudo-anonimity (it would be pretty hard for somebody to find out which addresses were funded for donation purposes).

[vijaychavda]

Ohh I get it now, thank you very much 

I am new to this forum, I tried to commend your replies but it seems I don't have enough 'smerits'.

Anyways, thanks for your answers!

[mocacinno]

No worries about the merits... I was happy to help
I currently have a forum rank that cannot be increased any further by receiving merits, so i have no actual need for them... They're more like a badge of honour (at least, they are for me).

I simply sent you a merit because you seem like the kind of guy I want to encourage to stick around, and you need at least 1 merit to move past the newbie-rank and all it's restrictions. Most newbies are spammers or scammers, but since your first post was a real question that doesn't get discussed several times a week, and was posted in a relatively well-chosen subforum, i just felt like you deserved to be able to rank up eventually

If you have any more questions, don't hesitate to ask!

[AB de Royse777]

Ohh I get it now, thank you very much  

I am new to this forum, I tried to commend your replies but it seems I don't have enough 'smerits'.

Anyways, thanks for your answers!

I sent mocacinno merits on behalf of you and also sent you 6 merits too for asking the questions and having this nice conversation. We need good conversations like this in the forum instead of spamming. I hope you will bring more creative yet very basic questions which people normally miss to learn or focus, and good members like mocacinno and others will help with the answers.

I simply sent you a merit because you seem like the kind of guy I want to encourage to stick around, and you need at least 1 merit to move past the newbie-rank and all it's restrictions. Most newbies are spammers or scammers, but since your first post was a real question that doesn't get discussed several times a week, and was posted in a relatively well-chosen subforum, i just felt like you deserved to be able to rank up eventually

100%
I do see all over spammers and scammers but finding a good forum member especially newbie is hard and if they were found then we need to encourage them.

Cheers guys :-)

By the way, my bad that I sent the merit to this post. I was originally intended to send you merit to you original post hehe.

Anyway it does not matter. Enjoy your day.

[vijaychavda]

Thank you so much Royse777 and mocacinno!

I am so pleased to know that people like you exist on this forum to make it a welcoming place for true enthusiasts.

My questions were really not asked because I am struggling with some situations, they were really asked just to have better understanding, and you guys have truly motivated me to stick around here and try to make this place a better place for healthy and productive discussions.

Cheers!