Question about privacy on Electrum Bitcoin.

[JustNewUser]

1- I want to know if Mr X send me 1 bitcoin to one of the addresses of my Electrum wallet and later I buy a birthday cake with some of the bitcoins in my wallet, Does Mr X understand the cake has been paid by some part of his monies?





2- In Electrum, When I want to send a payment it doesnt let me choose to pay from what address, in Multibit Classic if I remember correctly, each bitcoin address act like a bank account balance and you could choose to pay from what balance.

For example it was like

• BTC address A (MR X paid me in past)
• BTC address B (MR Y paid me in past)

so when I am going to buy for example a cake and I dont want MR X find out about It, I could use the balance BTC address B.

[1713866040]

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[1713866040]

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[AB de Royse777]

1- I want to know if Mr X send me 1 bitcoin to one of the addresses of my Electrum wallet and later I buy a birthday cake with some of the bitcoins in my wallet, Does Mr X understand the cake has been paid by some part of his monies?

Yes.

In Electrum, When I want to send a payment it doesnt let me choose to pay from what address

It does.

Right click on the address you want to send the fund from and you will see spend from



Click on spend from, Bitcoin will be spent from that address.

[BrewMaster]

1- I want to know if Mr X send me 1 bitcoin to one of the addresses of my Electrum wallet and later I buy a birthday cake with some of the bitcoins in my wallet, Does Mr X understand the cake has been paid by some part of his monies?

Yes.

actually it depends.
merchants (like a bakery where you buy the cake) don't usually reuse addresses and even if they do, it is still not an easy task to figure out who does the address belong to unless they are publicly announcing it which you could find it by searching on Google which again is not common.

so all "Mr X" could tell for sure is that the coins he sent has been spent and can see the amount and the address they went to.
anything extra is guesswork in 90% of cases.

[hatshepsut93]

Your first question is not unique to Electrum, it's a fundamental property of all blockchains (except privacycoins).  Whether someone can link an address to a wallet and organization depends on how the owner is using their wallet. There's a site called Wallet Explorer which links addresses to wallets, it has discovered wallets of many services like exchanges and casinos.

Since you are interested about privacy and Electrum, you should know that Electrum is an SPV wallet, and it relies on servers to get blockchain data, and those servers can easily log your IP and your transactions. If it's an issue for you, consider using a full wallet like Bitcoin Core, or run your own Electrum server.

[AdolfinWolf]

1- I want to know if Mr X send me 1 bitcoin to one of the addresses of my Electrum wallet and later I buy a birthday cake with some of the bitcoins in my wallet, Does Mr X understand the cake has been paid by some part of his monies?

Yes.

actually it depends.
merchants (like a bakery where you buy the cake) don't usually reuse addresses and even if they do, it is still not an easy task to figure out who does the address belong to unless they are publicly announcing it which you could find it by searching on Google which again is not common.

so all "Mr X" could tell for sure is that the coins he sent has been spent and can see the amount and the address they went to.
anything extra is guesswork in 90% of cases.

This. If the bakery uses something like Bitpay or Coinpayments, there is no way Mr X knows you send money to buy a birthday cake. (That is unless he files a (successful)  police report or sues the merchant for the transaction information.)

If you want to avoid this, and completely break the chain, you should look into using a Bitcoin mixer. The most Mr X will be able to see in that case, is that you sent your funds to mixer Z. (assuming the mixer operates in good faith and actually deletes any logs, obviously.)

[bitmover]

1- I want to know if Mr X send me 1 bitcoin to one of the addresses of my Electrum wallet and later I buy a birthday cake with some of the bitcoins in my wallet, Does Mr X understand the cake has been paid by some part of his monies?

Yes.

actually it depends.
merchants (like a bakery where you buy the cake) don't usually reuse addresses and even if they do, it is still not an easy task to figure out who does the address belong to unless they are publicly announcing it which you could find it by searching on Google which again is not common.

so all "Mr X" could tell for sure is that the coins he sent has been spent and can see the amount and the address they went to.
anything extra is guesswork in 90% of cases.

I agree with BrewMaster. He will not know what happened, but he will now that some coins were transfered. It could even be to another address of yours.


You need to careful when receiving coins in that address as well. If you later on buy more BTC and send to the same address, he can track where that BTC came from and how much you received.

Edit: You need to be extra careful with transactions from and to exchanges you have your ID verified. Because that's a way to track your ID from your used addresses.

[AB de Royse777]

~snip~

actually it depends.
merchants (like a bakery where you buy the cake) don't usually reuse addresses and even if they do, it is still not an easy task to figure out who does the address belong to unless they are publicly announcing it which you could find it by searching on Google which again is not common.

Yap it depends and my understanding was that Mr X knew the address of the bakery or the payment address was pseudo-known publicly. The bakery ultimately will send the bitcoin to an address or wallet where they store all their Bitcoin.

But as other poster said, if they use a gateway like coinpayments or bitpay then it will be harder to find out.

Take note few exchange and payment processor will deny payment and refund/freeze the funds if the funds come from mixers.

I think Binance do if I read it right somewhere.

[o_e_l_e_o]

Take note few exchange and payment processor will deny payment and refund/freeze the funds if the funds come from mixers.

Slightly off topic, but at what point do they consider coins acceptable again? For example, I can't send directly from a mixer to the exchange. What about if I withdraw from a mixer to my own wallet, then send it to the exchange? Or what if I withdraw to my own wallet, move the coins to another address I own, and then send them to a mixer? What if I split the coins up before moving them around so it looks as though the part that is going to end up on the exchange has been a payment to someone else? How many links does there need to be between mixer and exchange before coins are considered "acceptable" again?

There could come a time where every bitcoin in existence has, at some point, passed through a mixer. Where do they draw the line?

[AdolfinWolf]

Take note few exchange and payment processor will deny payment and refund/freeze the funds if the funds come from mixers.

Which merchants do this, any list/experiences? I've never had this happen before w/ funds send from Chipmixer.

[ABCbits]

Take note few exchange and payment processor will deny payment and refund/freeze the funds if the funds come from mixers.

Which merchants do this, any list/experiences? I've never had this happen before w/ funds send from Chipmixer.

Only merchants who use BitPay or CoinBase, but there are very few cases since IMO people who use mixer/coinjoin tends to avoid those services.
It's the only cases i manged to found (perhaps due to bad/generic keyword) : https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

CoinBase are known to blacklist some Bitcoin for their wallet/exchange services and it should apply to their payment processor as well.
But personally i wouldn't worry about it because there aren't any merchants who use BitPay/CoinBase to accept Bitcoin due to their unpopular business/politic decision

[o_e_l_e_o]

Do they track "tainted" coins in real time? I don't use Coinbase, but I might pay to a merchant who is using BitPay without realising it, or pay with coins I didn't realise were "tainted". What happens next? Obviously my transaction would broadcast. Would the merchant immediately be notified that something was wrong? Or would I be able to walk out the shop with my purchase, and then the merchant wouldn't find out they didn't receive their fiat payment until hours later?

These kind of practices really annoy me. The sooner we do away with these centralized authorities pushing their rules and regulations on honest users, and move to paying merchants properly peer to peer, the better. Pretty much every piece of cash in existence is "tainted", but no one has any issues with that.

[Harlot]

I don't think you can choose what Bitcoin you have in your electrum wallet that you can spend but I know you can choose what address you will send it from, and if Mr. X knows the tx id of the transaction then expect that he also know where the BTC is going. But to tell you honestly this is not a violation of privacy since tracking transaction with Blockchain is already being done in public, even authorities doesn't even need a warrant to observe the transactions happening in BTC's blockchain.

[squatter]

But personally i wouldn't worry about it because there aren't any merchants who use BitPay/CoinBase to accept Bitcoin due to their unpopular business/politic decision

Since when? Merchants dropped Coinbase after they started forcing merchants to custody their own coins, but literally all the merchants I use process payments through Bitpay.

Bitrefill would be an exception, but last time I checked they were giving me worse conversion rates than Bitpay, even after accounting for Bitpay's annoying "network fees."

[AdolfinWolf]

I don't think you can choose what Bitcoin you have in your electrum wallet that you can spend but I know you can choose what address you will send it from, and if Mr. X knows the tx id of the transaction then expect that he also know where the BTC is going.

Wrong and wrong.

You can pretty much choose which bitcoins you want to have in your wallet. Mixer -> any Non-KYC exchange (binance) -> Withdraw again, and voila, you now have coins from binance with no connection to you.  (I don't think Binance really likes this though.)

...But to tell you honestly this is not a violation of privacy.....

It kind of is though. When you buy a new car, you don't necessarily want the car dealership to know, or anyone else what your net worth is, or for how much you bought the car....

since tracking transaction with Blockchain is already being done in public, even authorities doesn't even need a warrant to observe the transactions happening in BTC's blockchain.

Doesn't mean that you shouldn't try to preserve your privacy.

Only merchants who use BitPay or CoinBase, but there are very few cases since IMO people who use mixer/coinjoin tends to avoid those services.
It's the only cases i manged to found (perhaps due to bad/generic keyword) : https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting/

CoinBase are known to blacklist some Bitcoin for their wallet/exchange services and it should apply to their payment processor as well.
But personally i wouldn't worry about it because there aren't any merchants who use BitPay/CoinBase to accept Bitcoin due to their unpopular business/politic decision

I guess it might be some opt-in feature then, otherwise we probably would've seen a lot more posts than just this article.

No doubt though that Coinbase/Other exchanges (Kraken/Bitstamp) are tracking tainted coins and perhaps will even take retroactive measures against them some day. I wouldn't be surprised.

[HCP]

I don't think you can choose what Bitcoin you have in your electrum wallet that you can spend but I know you can choose what address you will send it from, and if Mr. X knows the tx id of the transaction then expect that he also know where the BTC is going.

Actually, yes you can choose exactly which Bitcoin (UTXOs) to spend from your wallet.

Using the "Coins" Tab (Might need to use "View -> Show Coins" if you haven't enabled the tab already). This will show you ALL the individual UTXOs controlled by your wallet:



You can think pick and choose exactly which ones you want to spend (ctrl+click, shift+click etc):



And then you can "right click" and "spend":



And your "send" transaction will be created from JUST those UTXOs:



NOTE: Electrum just uses these UTXOs as the "available" UTXOs for this transaction, it won't necessarily use ALL of them. That is to say, if the amount you want to send does not require the use of all the UTXOs to, then Electrum will only actually use the ones required to cover the amount+fee.

So, if you absolutely wanted to include ALL the UTXOs (for consolidation or obfuscation or whatever), you would need to manually specify your "change" address as well by using Electrums "pay to many" functionality and some tricky maths to work out the amounts to send to each address etc

[bitmover]

No doubt though that Coinbase/Other exchanges (Kraken/Bitstamp) are tracking tainted coins...

I heard once Antonopoulos talking about this, and it makes sense.
The problem is that if go searching for any coin past transactions without any limit, almost all coins are tainted. So exchanges will look like 20 past transactions. If they were mixed in that past 20 transactions, then they are tainted.

But if you make like 20 tx inside your own wallet, with like 1 sat/byte (consolidation for example), you will have clean coins again.

...and perhaps will even take retroactive measures against them some day. I wouldn't be surprised.

About retroactive measures, they are useless unless you leave funds on an exchange. Then you are vulnerable to so much risks that this one is just one more.

[Kakmakr]

I know this might not be a popular solution for this problem, but I always send my coins through a mixer service to remove all traces from it's source. I then split the output to different addresses to make it easier to spend those coins. The reason I do this is not to hide anything illegal, but rather to protect myself from something that might have been illegal before I received those coins. 

I never re-use the same address, so nobody would be able to trace it back to me. I also transfer coins to hardware wallets, where I have a bit more control over the output. <No IP logging on servers> 

[Velkro]

The reason I do this is not to hide anything illegal, but rather to protect myself from something that might have been illegal before I received those coins. 

There is huge flaw in your thinking and actions. You could easily get "illegal" coins after receive them from mixing service.
So you could have problems from trying to not get into any . Read about over 4000 hacked bitcoins mixed at chip mixer. If you use that service, you easily can get those coins.

[bitrefill]

But personally i wouldn't worry about it because there aren't any merchants who use BitPay/CoinBase to accept Bitcoin due to their unpopular business/politic decision

Since when? Merchants dropped Coinbase after they started forcing merchants to custody their own coins, but literally all the merchants I use process payments through Bitpay.

I stand corrected, it was long time ago and i thought they have both custodial and non-custodial option.

Bitrefill would be an exception, but last time I checked they were giving me worse conversion rates than Bitpay, even after accounting for Bitpay's annoying "network fees."

Their rates isn't that bad, but it's still popular option since they accept 0-conf, have lots of product and support various altcoin.

Hello, Bitrefill here. We have high premiums from some products difficult to source, like Amazon Germany (10%) but for example at Amazon US we have it at 1%, hotels. com, Flight Giftcard and many others at face value. It's individual per card, based on the price we are getting from our current suppliers. We are always adding new ones to try lowering prices as much as possible!

Let us know if you need something!

[ABCbits]

The reason I do this is not to hide anything illegal, but rather to protect myself from something that might have been illegal before I received those coins. 

There is huge flaw in your thinking and actions. You could easily get "illegal" coins after receive them from mixing service.
So you could have problems from trying to not get into any . Read about over 4000 hacked bitcoins mixed at chip mixer. If you use that service, you easily can get those coins.

Which would be identified as "mixers" coins rather than "illegal" coins since chip mixer have fixed chip values.

It's different story if government decide to make all "mixers" coins is illegal.

Let us know if you need something!

Thanks for the clarification (it's off-topic BTW)