advantage of showing unspent outputs among multiple Bitcoin addresses

[joe1234]

Hello forum,

Is showing unspent outputs among multiple Bitcoin addresses an important wallet feature? Why?


Thank's a lot!

Joe

[1714861201]

1714861201

[NeuroticFish]

Is showing unspent outputs among multiple Bitcoin addresses an important wallet feature? Why?

1. One may keep track and don't spend "coins from Joe" together with "coins from Amanda" for better privacy (maybe the world knows that address 1 belongs to him, but nothing about address 2)
2. One may be careful and avoid spending from addresses with too many (small) inputs when fees are big.

So yes, imho it's an important feature.

[Charles-Tim]

Everything about Bitcoin is completely transparent, Bitcoin transactions are just to be like that. Ones you spend from a Bitcoin wallet, the change address UTXO is traceable on the blockchain. I see it as a special feature to make bitcoin transaction completely transparent, but experienced Bitcoin users knows how to maintain privacy by not having their coins on single address, but well distributed to other addresses while making use of coin control when necessary.

[o_e_l_e_o]

I wouldn't even consider using a wallet which did not allow me to see which outputs were present on which address within that wallet and instead just opted to show me a single global balance.

I am pretty meticulous about privacy and not linking addresses together. If I give out address A on this forum, and address B to a peer-to-peer trader who learns my real life identity through a bank transfer (for example), then the last thing in the world I want to do is spend coins from address A and address B together in the same transaction and completely de-anonymize myself.* Maybe I want to see individual outputs so I can combine them with other outputs on the same address to generate an appropriate amount of change or no change at all. Or maybe there are a few addresses which I don't mind linking together, and so I want to be able to consolidate from those ones specifically, while excluding the other ones in my wallet. Being able to see exactly where all your coins are is a pretty core feature as far as I am concerned.

*In reality, I could never do this even by mistake since I use entirely different wallets for such purposes, but the point still stands.

[bitmover]

*In reality, I could never do this even by mistake since I use entirely different wallets for such purposes, but the point still stands.

This is very important to avoid mistakes. We are all humans. You may expose your identity if you mistakenly spends different outputs together.

One single transaction with a mistake like that will be forever in the blockchain, and it is very likely that in the future someone may link those inputs together and get some of your personal information which you didn't want to expose.

It is important to have a wallet to use in exchanges that you do KYC, other for the forum, other for btcpay, and so on.

[HCP]

Is showing unspent outputs among multiple Bitcoin addresses an important wallet feature? Why?

It really depends on your personal wants/needs and the use-cases that you are using the wallet for.

As some users have noted, for them, being able to identify which UTXOs are on which particular addresses is a key component of their strategy for maintaining privacy etc.

I can well imagine that some users don't care about this... so, for them, this sort of functionality is not important.


Are you asking because you're designing a wallet... or trying to choose a wallet to use?

[pooya87]

*In reality, I could never do this even by mistake since I use entirely different wallets for such purposes, but the point still stands.

This is very important to avoid mistakes. We are all humans. You may expose your identity if you mistakenly spends different outputs together.

One single transaction with a mistake like that will be forever in the blockchain, and it is very likely that in the future someone may link those inputs together and get some of your personal information which you didn't want to expose.

It is important to have a wallet to use in exchanges that you do KYC, other for the forum, other for btcpay, and so on.

It's not the end of the world though, there are a lot of other ways to leak information that would lead to loss of privacy for example a large number of bitcoin users use SPV clients some of which depend on a single centralized server and whenever they fetch their history to sync they lose all their privacy. Even in implementations such as Electrum where user connects to a random node that node can still create a link between their different addresses based on wallet that is syncing or IP address.

[o_e_l_e_o]

It's not the end of the world though, there are a lot of other ways to leak information that would lead to loss of privacy

In terms of privacy, it pretty much is the end of the world though. Linking addresses together as inputs in a transaction is probably the single worst thing you can do, short of posting your xpubs on a public forum.

Even if I use an SPV client, only the server in question can link my addresses. They may or may not share that information with other users or entities. They may or may not even store such information. If I link two addresses together in a transaction, then it is permanently in the public record for everyone to see, forever. I'm not saying you should disregard the impact of using an SPV wallet, but linking addresses via a transaction is much worse.

[Charles-Tim]

<...>

But what concerns me most is that most SPV wallets do not have the special coin control feature, it is few that have it, I even only know Electrum to have it out of all the wallets I have used before. Most all other wallets choose the address to spend from automatically and not having the manual section option, depriving people of privacy because I believe without people manually spending from a particular address, wallet automatic selection may not be perfect.

[mocacinno]

<...>

But what concerns me most is that most SPV wallets do not have the special coin control feature, it is few that have it, I even only know Electrum to have it out of all the wallets I have used before. Most all other wallets choose the address to spend from automatically and not having the manual section option, depriving people of privacy because I believe without people manually spending from a particular address, wallet automatic selection may not be perfect.

Next to electrum, you also have Wasabi. I usually use electrum instead of my hardware wallet's default wallet (i own trezor and ledger devices, but their user interface is not as good as electrum's), just because electrum's feature set is greatly superior to their wallets.

As a non-SPV wallet, you can always go for core, which also allows you to see all unspent outputs funding your addresses.

I always wonder why people mess around with unknown wallets when you have electrum, wasabi and core at your disposal. It always make little sense to me when i see newbies entering the forum, talking about "unknown wallet X" or "custodial web wallet Y" when they might aswell do it right and pick a decent one instead.

[o_e_l_e_o]

wallet automatic selection may not be perfect.

Most wallet automatic selections are designed to either minimize the number of inputs required for the transaction, or to consolidate a bunch of extra inputs at the same time, and pay little to no attention as to which addresses of the wallet those inputs happen to be on. Not only are these not perfect solutions, but they can be disastrous for privacy.

I usually use electrum instead of my hardware wallet's default wallet (i own trezor and ledger devices, but their user interface is not as good as electrum's), just because electrum's feature set is greatly superior to their wallets.

It never fails to amaze me that multi-million dollar corporations hire entire teams of professional programmers and engineers with multiple qualifications and expensive salaries and yet still produce inferior products to a couple of people working from their own homes for free. Usually the best software, from Linux to Electrum, is free and open source.

And if you want to use Electrum privately, then just run your own Electrum server and point it at your own full node.

[BlackHatCoiner]

It always make little sense to me when i see newbies entering the forum, talking about "unknown wallet X" or "custodial web wallet Y" when they might aswell do it right and pick a decent one instead.

It's because they haven't searched for it or they've been misinformed. I am on some forums where there are discussions about cryptocurrency speculation. Hell's toxicity.

The majority of those users aren't interested in Bitcoin, they just want to make few bucks on trading with this new magic and completely ethical thing called “leverage” AKA “make money from money you don't have”. All these don't have a clue of what's a non-custodial wallet; sure, they may have heard it, but, huh, does it support all of my useless and ready-to-get-rid-of altcoins?

And it's true, why should they choose Electrum over Exodus that allows you to even transact dogecoins? Find me a non-custodial wallet (SPV) that allows you to do that. I know! There isn't.

[pooya87]

It's because they haven't searched for it or they've been misinformed.

They do search for it but because the custodial wallets and shady closed source ones that are making money from their users have funds to advertise they are easier to find by newbies who end up using them instead.

And it's true, why should they choose Electrum over Exodus that allows you to even transact dogecoins? Find me a non-custodial wallet (SPV) that allows you to do that. I know! There isn't.

Exodus that you mentioned is "non-custodial" itself, it's just closed source so it should never be used.

[BlackHatCoiner]

They do search for it but because the custodial wallets and shady closed source ones that are making money from their users have funds to advertise they are easier to find by newbies who end up using them instead.

Well, it depends on what you want to do. When I was searching for Bitcoin wallets, I hit bitcoin.org and then found out about electrum. When you've heard that Binance is a great, secure, user-friendly wallet and they sell every shitcoin, you'll be disorientated.

Exodus that you mentioned is "non-custodial" itself, it's just closed source so it should never be used.

Correct, but I was wondering; if you don't know the source code of a wallet software, how can you know that it isn't being on someone's custody?

[pooya87]

Well, it depends on what you want to do. When I was searching for Bitcoin wallets, I hit bitcoin.org and then found out about electrum. When you've heard that Binance is a great, secure, user-friendly wallet and they sell every shitcoin, you'll be disorientated.

You know "bitcoin.org" exists, a newcomer may not. They usually use google or see the advertisement somewhere on the internet, maybe while watching a video or surfing some website.
This is also the reason why there are so many phishing victims and also why Google and Youtube briefly banned cryptocurrency related ads, although not all of them.

Correct, but I was wondering; if you don't know the source code of a wallet software, how can you know that it isn't being on someone's custody?

When you have access to your private keys and control them, you know that it is not in someone else's custody but what you don't know is that if someone else also has access.
In contrast in a custodial wallet you have zero access to your keys and give up full control.

[Charles-Tim]

You know "bitcoin.org" exists, a newcomer may not. They usually use google or see the advertisement somewhere on the internet, maybe while watching a video or surfing some website.

I remembered a month ago when I wanted to make a topic about this, I later thought it is not necessary but I still have the screenshot of the search engine of the best Bitcoin wallets (not even crypto wallet, but Bitcoin wallet is what I searched for online), only very few sites recommend Electrum and Wasabi, I did not think I even saw Bitcoin Core. I saw many noncustodial wallets that can not help in privacy, what I later saw mostly are custodial wallets and exchanges which can be very misleading. The first wallet I used and I thought was good was Coinbase.com until I joined this forum to know they are wallet misleading people, making people not to know they have no full control.

[HCP]

One really complicating factor is that a lot of the "less desirable" wallets... have the glossy UI and are well polished.

Too often people associate a fancy UI with "this must be good"... so wallets like Exodus, which look good, despite having numerous flaws end up with lots of users.

Then you just have "word of mouth"... there are an absolute shit load of people who use coins.ph in the Phillipines because that is what their friend uses. It is also highly integrated with payment services there... despite being a custodial wallet.

Similar things happen with exchanges, someone finds out from their friend that Binance or coinbase or blockchain.com or whatever is the best thing in the world, so off they go and start using those services without even knowing about things like Electrum or Bitcoin Core.

As the saying goes, you can lead a horse to water, but you can't make it drink... same with bitcoin wallets. ¯\_(ツ)_/¯

[mocacinno]

--snip--
Then you just have "word of mouth"... there are an absolute shit load of people who use coins.ph in the Phillipines because that is what their friend uses.
--snip--

Even worse are those with a reasonably high rank on bitcointalk (even green trust),  that come into threads where you're trying to convince people to switch from "custodial online unknown wallet X" to "non-custodial, open-source, peer-reviewed, desktop/hardware wallet Y" and start saying things like: "I've been using wallet X for months now, and still i'm not robbed... Go ahead and use X".

What i mean to say is: there are even longtime members on here that promote custodial and web wallets, and actively spread FUD against known hardware wallet brands...

[Pmalek]

I remembered a month ago when I wanted to make a topic about this, I later thought it is not necessary but I still have the screenshot of the search engine of the best Bitcoin wallets (not even crypto wallet, but Bitcoin wallet is what I searched for online), only very few sites recommend Electrum and Wasabi, I did not think I even saw Bitcoin Core.

Not much has changed today. Check out the results when you perform a search for "best bitcoin wallets". This is the top-ranking article: https://www.thebalance.com/best-bitcoin-wallets-4160642.

The best "wallet" according to them is the Coinbase "cryptocurrency exchange".
They recommend that beginners use SoFi which is a brokerage platform. In their explanation about SoFi, they mention that users can't deposit or withdraw from the platform, but it's still something they recommend to new crypto users.

[BlackHatCoiner]

Similar things happen with exchanges, someone finds out from their friend that Binance or coinbase or blockchain.com or whatever is the best thing in the world, so off they go and start using those services without even knowing about things like Electrum or Bitcoin Core.

I believe the root of that problem is that they don't know how it works in the first place. While they know that, in theory, Bitcoin was created to prevent the third-party (although I doubt if everyone knows this), they'll prefer going with Binance or Coinbase, because they'll feel more secure. They haven't acknowledged how it works, though. What's a Bitcoin client, why would one use it and how does that damn thing that I just bought work...