Yes, this is exactly what sprung to mind when I read this proposal. In my opinion, the biggest disadvantage - just as in Monero - is the need for transaction scanning.
There were around 100 million Bitcoin transactions in 2021 [1], while Monero only had around 5 million transactions in the same time [2] - a factor of 20 that is not insignificant I'd say, especially when using an SPV wallet. If you open it after a few weeks or months of inactivity, it will have to churn through a ton of computation if such a scheme was introduced in Bitcoin.
There were 5,868,096 total transactions, for an average of 16,076 transactions per day for the year
It looks like btc will go closer to what Monero was am I right? The problem I see with that is Monero was limited in growth because of the mass bans probably because of KYC. If Bitcoin implements silent payments to increase privacy (Woo!) would this put us at risk of meeting the same fate as Monero? or are we too big?
I do not think any exchange can decide not to accept bitcoin because it will have side effect on the exchange, it is true that the transparent bitcoin blockchain helps in adoption but exchanges can decide to accept only on-chain transactions if they want transparency. Even, in a lightning network payment, only what is most transparent is when opening and closing a channel, lightning payment transaction is not also recorded on blockchain.
Interestingly, Lightning did start to get adopted by a handful of exchanges lately. So I don't see more Bitcoin-native privacy solutions as a future problem for exchanges. However, my stance towards centralized exchanges
[pretty negative] is not a secret around here, anyway. So I'd take more on-chain privacy, regardless of what exchanges think about it, as long as it's otherwise a good improvement.
Why? From the blockchain's perspective, nothing changes. It will just show a transaction from address A to address B, and it doesn't matter how the owner of address B gave their address to the owner of address A.
That's correct: this is just a way to give someone your address without the need of a private channel. And to allow posting a public key somewhere static, but getting paid into different 'actual addresses' (in terms of private keys needed to spend those UTXOs).
Let's say TPB accept Silent payments. Someone sends them a donation, which confirms on-chain. Nobody else can know TPB is the receiver, because they can't know which on-chain address belongs to their Silent payment.
So why they don't just generate a brand new address in each refresh, for each visitor?
They absolutely could. This is just a way to allow people to post something static online, without need to generate one per visitor or site reload. As said before, it also removes the need for a secure channel since anyone can intercept this published address, in-flight or wherever, because the sender doesn't use it directly, but combines it with his own key.
what if the silent payment gets intercepted by a middle man through "Man in the middle attack" whereby Alice' public key was changed by the attacker to his own public key then sends to Bob and in similar way, Bob's public key gets changed by the attacker and forwards his own public key to Alice instead, so can he control the transaction in his favor and compute the both public keys with his private key? And what are the ways to bypass such attack when using silent payment?
Sure, a MITM can change Alice's public key in transit; but this is a point
for a system such as in monero, because the public key can literally be posted on your website or Bitcoin profile publicly. This way you could use multiple devices and internet connections (less likely to all be compromised by the same attacker) to verify that they match.
I lost you at
'Bob's public key gets changed by the attacker and forwards his own public key to Alice instead, so can he control the transaction in his favor and compute the both public keys with his private key'. How exactly is this supposed to work? Could you explain more in detail maybe? In the scheme described here, Bob's key is actually never sent back to Alice in the first place.
[1]
https://blockchair.com/bitcoin/charts/total-transaction-count[2]
https://web.getmonero.org/2021/04/24/this-year-in-monero.html