GekkeBelg (OP)
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Hello
I use the online wallet of Blockchain.com and it's nice that I can create a new address for every incoming transaction to keep my privacy high.
But what I'm not entirely sure of, is if my withdrawals always get sent from the same address or not. For example Electrum does this. If I send 2 transactions from my Electrum wallet (1 to receiver A and 1 to receiver B), those two receivers A and B can see it came from the same source (if they talk to each other ofcourse, only then). With Coinbase it's difference. They send out their withdrawals from all kinds of different transactions. In this same example receivers A and B would never know they actually both received a payment from the same source (me), not even if they talked to each other about it and analyzed the blockchain.
So my question is: is Blockchain the same as Coinbase or the same as Electrum? Does anybody know this? I could not find this in their FAQ anywhere.
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nc50lc
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September 23, 2021, 07:27:13 AM |
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So my question is: is Blockchain the same as Coinbase or the same as Electrum? Does anybody know this? I could not find this in their FAQ anywhere.
In terms of handling funds, Electrum and Blockchain.com are the same because both are non-custodial. You'll be spending your " unspent transaction outputs" ( UTXO) from your received transactions to create a new transaction. So if you're receiving funds with a single address, all your withdrawals will use the UTXOs associated with that address in your wallet; to mitigate that, you just have to use a different address every time you receive funds so " receiver A and B" will see that the txns came from different addresses. You'll have more options in Electrum by utilizing " coin control" for better selection of UTXO. Coinbase ( Wallet/Exchange) is different, it' a " custodial service", withdrawals came from different addresses because those are Coinbase's " Hot Wallet" used for withdrawals. Different addresses, yes, but in terms of privacy, authorities or whoever in contact with them can easily point your identity based from their database and/or blockchain analysis, custodial services aren't really that private with their hot wallets, even a regular user can tell that it's from Coinbase by using walletexplorer.com.
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pooya87
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In terms of privacy different wallets in decreasing order are like this: Full node > Server-independent1 SPV > Single-server-dependent2 SPV > Web wallets (non-custodial)3 >> Web wallets (custodial)
1 Any SPV client that can connect to an arbitrary full node and fetch the necessary data (this includes Electrum) 2 These are light clients that connect to a fixed (centralized) server and fetch their data 3 I consider users of web wallets to have 0 privacy in general
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HeRetiK
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September 23, 2021, 09:19:55 AM |
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With Coinbase it's difference. They send out their withdrawals from all kinds of different transactions. In this same example receivers A and B would never know they actually both received a payment from the same source (me), not even if they talked to each other about it and analyzed the blockchain.
A and B don't need to analyze the blockchain in this case. If the situation warrants it, they can contact the authorities, which could contact Coinbase, which could hand over all your transaction data and personal information.
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GekkeBelg (OP)
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September 23, 2021, 05:11:13 PM |
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So my question is: is Blockchain the same as Coinbase or the same as Electrum? Does anybody know this? I could not find this in their FAQ anywhere.
In terms of handling funds, Electrum and Blockchain.com are the same because both are non-custodial. You'll be spending your " unspent transaction outputs" ( UTXO) from your received transactions to create a new transaction. So if you're receiving funds with a single address, all your withdrawals will use the UTXOs associated with that address in your wallet; to mitigate that, you just have to use a different address every time you receive funds so " receiver A and B" will see that the txns came from different addresses. You'll have more options in Electrum by utilizing " coin control" for better selection of UTXO. Coinbase ( Wallet/Exchange) is different, it' a " custodial service", withdrawals came from different addresses because those are Coinbase's " Hot Wallet" used for withdrawals. Different addresses, yes, but in terms of privacy, authorities or whoever in contact with them can easily point your identity based from their database and/or blockchain analysis, custodial services aren't really that private with their hot wallets, even a regular user can tell that it's from Coinbase by using walletexplorer.com. Thanks for this detailed explanation! So Electrum and Blockchain are non-custudial and Coinbase is custodial. Do you know any other custodial wallets where you can quickly open an account without having to go through an extensive verification process like you have to at Coinbase?
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o_e_l_e_o
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September 23, 2021, 07:16:48 PM |
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So Electrum and Blockchain are non-custudial Yes, but they aren't comparable. Electrum is open source software which you run yourself on your own computer. Provided your computer is not infected with malware, you can verify that the seed phrase and private keys are known only to you, no one else can spend your coins, and no one can lock you out of your wallet. Blockchain.com is a closed source website. You have no idea how they generate your seed phrase, who else might have access to it, or who else could potentially spend your coins. Your account is vulnerable to hacks, and their central wallets and servers are vulnerable to hacks. They can lock or shut down your account if they choose, and unless you have your seed phrase backed up somewhere, your coins will be lost. All web wallets are the absolute lowest in the rankings for both security and privacy. Do you know any other custodial wallets where you can quickly open an account without having to go through an extensive verification process like you have to at Coinbase? The real question is why you would want to do this? You are sacrificing all your privacy and all your security, giving unknown strangers the ability to prevent your transactions, freeze your account, or even steal your coins. The whole point of bitcoin is to not trust third parties with your money.
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BitMaxz
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September 23, 2021, 11:59:20 PM |
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Do you know any other custodial wallets where you can quickly open an account without having to go through an extensive verification process like you have to at Coinbase?
Well, if you don't care about privacy then I would list a few of them. - Binance wallet - Bitpay wallet - Coinex wallet And any exchanges with wallet features are custodial wallets. It means you don't own any keys if those exchanges having issues on their wallets it would be a big problem. And I suggest you to read this [General] Bitcoin Wallets - Which, what, why?
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nc50lc
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-snip- Do you know any other custodial wallets where you can quickly open an account without having to go through an extensive verification process like you have to at Coinbase?
Unfortunately, custodial wallets that fall to that category are most likely scams. Legit wallets have to comply with your Government's law so a level of verification is required depending on the country. For Exchanges, their 'withdrawal fee' is ridiculous compared to wallets, you wouldn't want to use them as a wallet even though some of them allow crypto withdrawals for non-verified users. They can also lock your funds if they found " something" in your transactions.
Despite the consensus in the replies, you still decided to go for custodial... perhaps in terms of privacy, are you only concerned about your privacy against users, not the authorities?
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HCP
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September 24, 2021, 01:03:18 PM |
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Do you know any other custodial wallets where you can quickly open an account without having to go through an extensive verification process like you have to at Coinbase?
One of the core tenants of Bitcoin was to give you complete control of your coins. Why would you want to use a custodial wallet? ![Huh](https://bitcointalk.org/Smileys/default/huh.gif) Is there some benefit that you believe they offer over a non-custodial wallet like Bitcoin Core or Electrum or similar?
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n0nce
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It's nice that I can create a new address for every incoming transaction to keep my privacy high.
This is a normal feature that every good wallet has. Nothing to do with custodial or non-custodial. From your seed words, unlimited private keys can be derived and from each of those private keys you can calculate a public key and an address where you can receive funds. A good hardware or software wallet displays you a new address every time you click 'receive' by default. Also, if you e.g. pay person A first, then the change arrives into a new address (change address), from which you'll pay person B, so they will absolutely not see the funds coming from the same address. If you're looking for something free and quick & easy to setup, as you alluded to in your replies, I'd recommend to start with BlueWallet. What I like about it is that it's open source and allows to have multiple separate non-custodial Bitcoin on-chain wallets as well as play around with Lightning (however the LN functionality is custodial, so just don't keep too many funds on there). You can also import xpubs to keep track of activities on all of your hardware or offline wallets as well.
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bitmover
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September 25, 2021, 02:09:08 AM |
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Coinbase (Wallet/Exchange) is different, it' a "custodial service", withdrawals came from different addresses because those are Coinbase's "Hot Wallet" used for withdrawals.
Just to add to the conversation, Coinbase has a non-custodial wallet as well. They offer 2 kind of wallets: custodial and non-custodial. You can see it here: https://wallet.coinbase.com/faq/How do I protect against losing access to my funds? Coinbase Wallet is a user-controlled, non-custodial product. The app generates a 12 word recovery phrase which is what gives you, and only you, access to your account to move received funds. Coinbase will never have access to this seed, meaning that we cannot move funds on your behalf even if you lose access to your recovery phrase. I am not recommending it and I think Electrum is a much better option. This coinbase wallet has a similar degree of security compared to Blockchain.com wallet. Both are online wallets, they are convenient but they vulnerable to many kind of attacks.
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n0nce
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September 25, 2021, 02:22:12 AM |
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This coinbase wallet has a similar degree of security compared to Blockchain.com wallet. Both are online wallets, they are convenient but they vulnerable to many kind of attacks.
To be honest, I don't think it's more convenient to create an account at a exchange to use as a wallet instead of just downloading a non-custodial App or PC software. It's faster and easier to set up and has more features. I don't see any added 'convenience' in an online BTC wallet.
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nc50lc
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September 25, 2021, 04:13:19 AM |
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Coinbase (Wallet/Exchange) is different, it' a "custodial service", withdrawals came from different addresses because those are Coinbase's "Hot Wallet" used for withdrawals.
Just to add to the conversation, Coinbase has a non-custodial wallet as well. They offer 2 kind of wallets: custodial and non-custodial. You can see it here: https://wallet.coinbase.com/faq/Yes, " Conbase Wallet" is non-custodial and " Coinbase" is custodial. But OP's description of the withdrawal doesn't fit 'Coinbase Wallet' so I find it not necessary to mention here.
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o_e_l_e_o
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September 25, 2021, 07:48:33 AM |
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Also, if you e.g. pay person A first, then the change arrives into a new address (change address), from which you'll pay person B, so they will absolutely not see the funds coming from the same address. Correct, but in many cases it will still be trivial to link the two payments. If I pay make a transaction from Address A, and I send something like 0.05 BTC to one address and 0.15820351 BTC to another address, then it is completely obvious to everyone that the latter address is my change address. If I then pay someone else from my change address, then they can easily link the two transactions as having come from the same person. The same is true for anything else which identifies the change address, such as one output being to a different address type from the input while the change output is the same address type as the input.
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bitmover
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September 25, 2021, 10:04:18 AM |
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To be honest, I don't think it's more convenient to create an account at a exchange to use as a wallet instead of just downloading a non-custodial App or PC software. It's faster and easier to set up and has more features. I don't see any added 'convenience' in an online BTC wallet.
It is more convenient because you can access your wallet everywhere , just like an email. You just need to remember your login and password to log into your wallet in any device. (You don't need to carry a seed around) If you need to access your bitcoin in another device, such as a computer at work or in another kind of device, they offer some nice convenience. I used blockchain.info in the past in that situation and it was nice. Of cource the security is much lower, but you can add just a few bucks to it (like 50 usd). I consider them similar to a physical fiat wallet.. you can carry a few bucks of cash in your pockets, if you lose it that's not a big deal.
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o_e_l_e_o
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September 25, 2021, 10:13:39 AM |
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-snip-
I use a mobile wallet for small amounts which I need to carry around with me and spend on a daily basis. The security isn't great (although far better than that of a web wallet), but I've never been hacked and it is only small amounts that I can afford to lose. For anything larger I need to carry around with me and access anywhere, then I can take a very small hardware wallet which will link up with my phone. Both easily fit in pockets, bags, etc. This is a far preferable option to using a web wallet if "accessing anywhere" is the goal. Your security is much better, your privacy is much better, the fees are much better, and you can still use advanced options like coin control or RBF which most Web wallets don't offer.
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LoyceV
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If I pay make a transaction from Address A, and I send something like 0.05 BTC to one address and 0.15820351 BTC to another address, then it is completely obvious to everyone that the latter address is my change address. That's easy to go around: pay a "weird" amount, and make sure you get a round amount as change ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif) It is more convenient because you can access your wallet everywhere , just like an email. You just need to remember your login and password to log into your wallet in any device. (You don't need to carry a seed around) That's terrible for security! I never enter any passwords on devices that aren't mine. Of cource the security is much lower, but you can add just a few bucks to it (like 50 usd). Wait, if you know that already, why not use a mobile wallet instead?
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o_e_l_e_o
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September 25, 2021, 11:04:20 AM |
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That's easy to go around: pay a "weird" amount, and make sure you get a round amount as change ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif) Absolutely. Or split your change between multiple addresses to make it seem as if you are paying multiple people. Or manually choose to send your change to a different address type to obfuscate that it is going to a change address. Or even better, leave no change at all. It's entirely possible to hide what is a change address (or even manipulate the heuristics in to actively identifying the payment address as the change address), but the vast majority of wallets don't do this and the vast majority of users don't know how to do this. If OP is using Electrum or Blockchain.com, and just makes a bunch of standard transactions which chain together all his change addresses, then it is trivial to identify them all and link all the transactions as originating from the same user/wallet.
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bitmover
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That's terrible for security! I never enter any passwords on devices that aren't mine. Of cource the security is much lower, but you can add just a few bucks to it (like 50 usd). Wait, if you know that already, why not use a mobile wallet instead? Well, there might be situations where you have don't have the choice to use your own device. Let's suppose you work on a submarine. Or that you are a military and on the location you are the only way to access internet is in a computer that you received by your employer. I faced similar situations a few years ago (which I don't want to specify here for privacy purposes), where i didn't have wifi in my mobile device and I had to use a computer provided by my employer to use internet. and blockchain.info was handy. I know these situations are becoming very unlikely in recent years and they will be more unlikely in the future, specially in developed countries.
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o_e_l_e_o
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I faced similar situations a few years ago (which I don't want to specify here for privacy purposes), where i didn't have wifi in my mobile device and I had to use a computer provided by my employer to use internet. and blockchain.info was handy. I would still prefer to either carry around an encrypted USB stick with my wallet file on it, or carry around a seed phrase written down on paper which I could restore my wallet from using some open source software such as Electrum. Again, both are far better from both a privacy and security view point than using a web wallet. An even better solution would be to carry around a USB stick with Tails on it, so you can boot the computer you have been provided in to a clean, live OS, and then either load your wallet from the encrypted persistent storage, or recover it from scratch using your seed phrase.
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