Consolidating UTXOs in wallets.

[virasog]

Note that if you combine all of your UTXOs to one address using a single transaction, any blockchain analysis software will know that a single person owns all of the addresses.

It is probably better to leave them like that if the inputs are large enough, i.e. no 10000 sat outputs lying around, and to combine only the dust inputs (even better, send the consolidation transaction through through a mixer first)

Yes, but still when an average user will send any amount of bitcoin to someone, electrum by default will create two outputs, one to send the amount that you send to the other address and the other output to send the entire balance of the wallet to the change address. So this will automatically combine all of your UTXOs to the change address.

Not everyone know about coin control feature and not everyone is techy (or even willing to) to do all these complications.

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[albert0bsd]

Yes, but still when an average user will send any amount of bitcoin to someone, electrum by default will create two outputs, one to send the amount that you send to the other address and the other output to send the entire balance of the wallet to the change address. So this will automatically combine all of your UTXOs to the change address.

Reading this i thing that sparrow wallet have better coin control, you can avoid this easily in that wallet.

Not everyone know about coin control feature and not everyone is techy (or even willing to) to do all these complications.

They should know that, Well at least users who take care about their privacy.

[Pmalek]

Yes, but still when an average user will send any amount of bitcoin to someone, electrum by default will create two outputs, one to send the amount that you send to the other address and the other output to send the entire balance of the wallet to the change address. So this will automatically combine all of your UTXOs to the change address.

Don't confuse the entire balance of the wallet to the balance of the addresses whose UTXOs are used in a new transaction. The change from the address/addresses used for sending a transaction will be consolidated into one new address, but the rest of the coins in the wallet remain where they are and would still need to be consolidated later if your ultimate goal is to merge them all together.

Let's say your wallet has 5 funded addresses.
Address 1
Address 2
Address 3
Address 4
Address 5

You use the coins from Addresses 1 and 2 for a transaction. Any leftover chance will go to a new change address. The coins in addresses 3, 4, and 5 remain where they are.

[virasog]

Reading this i thing that sparrow wallet have better coin control, you can avoid this easily in that wallet.

I haven't used the sparrow wallet so i do not know how does it offer coin control in a more better way as i usually use Electrum for bitcoins.

Yes, but still when an average user will send any amount of bitcoin to someone, electrum by default will create two outputs, one to send the amount that you send to the other address and the other output to send the entire balance of the wallet to the change address. So this will automatically combine all of your UTXOs to the change address.

Don't confuse the entire balance of the wallet to the balance of the addresses whose UTXOs are used in a new transaction. The change from the address/addresses used for sending a transaction will be consolidated into one new address, but the rest of the coins in the wallet remain where they are and would still need to be consolidated later if your ultimate goal is to merge them all together.

Let's say your wallet has 5 funded addresses.
Address 1
Address 2
Address 3
Address 4
Address 5

You use the coins from Addresses 1 and 2 for a transaction. Any leftover chance will go to a new change address. The coins in addresses 3, 4, and 5 remain where they are.

You are right that we can use the Addresses 1 and 2 only or whichever address we want but my point of view was that most people do not know about this feature. They may even send some bitcoin to someone, and they won't even know that their rest of the UTXOs are already combined by the Electrum through change address.

[Pmalek]

You are right that we can use the Addresses 1 and 2 only or whichever address we want but my point of view was that most people do not know about this feature. They may even send some bitcoin to someone, and they won't even know that their rest of the UTXOs are already combined by the Electrum through change address.

What I always found peculiar about Electrum was that the software doesn't have the Coins tab enabled by default and that you have to make it visible manually from the settings menu on first installation. It helps greatly with consolidation but unless you already know about it or find the option in the settings, you wouldn't know it's there.

[Medusah]

You are right that we can use the Addresses 1 and 2 only or whichever address we want but my point of view was that most people do not know about this feature.

It is really easy to figure it out.  When you are going to sign a transaction, click on "Advanced" and it shows the inputs you spend.  If the majority of electrum users are not aware of coin control, then I predict a bad future for bitcoin. 

[BitcoinsGreat]

You are right that we can use the Addresses 1 and 2 only or whichever address we want but my point of view was that most people do not know about this feature.

It is really easy to figure it out.  When you are going to sign a transaction, click on "Advanced" and it shows the inputs you spend.  If the majority of electrum users are not aware of coin control, then I predict a bad future for bitcoin.  

Every wallet have different feature and it is not required that every user should know about each and every feature of the bitcoin wallets.
So if the user aren't aware of coin control and no nothing about Consolidating UTXOs, that will have no impact on the use and also this does not suggests a bad future for the bitcoin.

You can have an iPhone 15, use only its basic features like calling, messaging and Internet surfing, taking pictures and videos without getting into much details of all the advance features. Does it make the Apple future Dull ? No, it will not.

[satscraper]

Luckily, Sparrow makes coin control a default feature via at- the-start-visible UTXOs tab on the left side of the main wallet window. Thus consolidation can be made manually  , but the opt via fake conjoin is preferable as it eliminates the need of  UTXOs selection in such  way that those outputs that were sitting as inputs in one of previous transaction were not separated between different addresses after end of consolidation.

[apogio]

So if the user aren't aware of coin control and no nothing about Consolidating UTXOs, that will have no impact on the use and also this does not suggests a bad future for the bitcoin.

Coin control is not important only for consolidating inputs. UTXO management is very important for privacy reasons too. Essentially coin control is like managing the dollar bills in your wallet. Would you pay for potatoes with a $100 bill? Probably not. What I mean is, it is much better to know how to do coin control rather than not. It doesn't suggest a bad future for the bitcoin, but rather a bad future for the coins' owner.

[NotATether]

You can have an iPhone 15, use only its basic features like calling, messaging and Internet surfing, taking pictures and videos without getting into much details of all the advance features. Does it make the Apple future Dull ? No, it will not.

I mean, at the end of the day, if you throw in social media apps into that list, this is basically what the majority of users are doing.

Similarly with a Bitcoin wallet, you're either looking at your balance, sending a transaction, or generating an address to receive money. Better if the address is already generated for you to copy. I don't think many people are using coin control, though I do.

[o_e_l_e_o]

Am I the only one who uses coin control as the default option? Whenever I want to make a payment, I start by selecting the UTXOs I wish to spend. There are lots of reasons you should do this over automatic selection. Privacy is the biggest one, as has been discussed already. I want to spend specific UTXOs for specific things, and I definitely don't want my wallet automatically consolidating UTXOs I don't want spent together. I also don't want my wallet to consolidate UTXOs in a transaction where I am paying an above average fee for a faster confirmation - I'll consolidate any UTXOs in a combination I choose, at a fee I choose, and at a time I choose. If I select UTXOs manually, I can select one(s) to create an appropriately sized change output and not be left with dust, or spend the change somewhere else simultaneously, or create no change at all in the first place. It saves me money and fees in the long run, and protects my privacy while doing so. Why would you not use it?

I wouldn't even dream of using a wallet which does not offer manual coin control, and I'd quite like to have the option to turn off automatic coin selection altogether to eliminate the risk of making a mistake.

[apogio]

Am I the only one who uses coin control as the default option? Whenever I want to make a payment, I start by selecting the UTXOs I wish to spend. There are lots of reasons you should do this over automatic selection. Privacy is the biggest one, as has been discussed already. I want to spend specific UTXOs for specific things, and I definitely don't want my wallet automatically consolidating UTXOs I don't want spent together. I also don't want my wallet to consolidate UTXOs in a transaction where I am paying an above average fee for a faster confirmation - I'll consolidate any UTXOs in a combination I choose, at a fee I choose, and at a time I choose. If I select UTXOs manually, I can select one(s) to create an appropriately sized change output and not be left with dust, or spend the change somewhere else simultaneously, or create no change at all in the first place. It saves me money and fees in the long run, and protects my privacy while doing so. Why would you not use it?

I wouldn't even dream of using a wallet which does not offer manual coin control, and I'd quite like to have the option to turn off automatic coin selection altogether to eliminate the risk of making a mistake.

No you are not the only one. As I said, I also do it. My sparrow wallet is always opened on the "UTXO" tab. Just like I would do if I needed to get euros out of my physical wallet. It's not like a bank account, where your money is essentially a number on the screen and you just reduce it whenever you spend.

As far as consolidation is concerned, I do it only when the sizes of the UTXOs are so low that they can't be used for a payment. And even then, I do it manually.

[Kruw]

Am I the only one who uses coin control as the default option? Whenever I want to make a payment, I start by selecting the UTXOs I wish to spend. There are lots of reasons you should do this over automatic selection. Privacy is the biggest one, as has been discussed already. I want to spend specific UTXOs for specific things, and I definitely don't want my wallet automatically consolidating UTXOs I don't want spent together. I also don't want my wallet to consolidate UTXOs in a transaction where I am paying an above average fee for a faster confirmation - I'll consolidate any UTXOs in a combination I choose, at a fee I choose, and at a time I choose. If I select UTXOs manually, I can select one(s) to create an appropriately sized change output and not be left with dust, or spend the change somewhere else simultaneously, or create no change at all in the first place. It saves me money and fees in the long run, and protects my privacy while doing so. Why would you not use it?

I wouldn't even dream of using a wallet which does not offer manual coin control, and I'd quite like to have the option to turn off automatic coin selection altogether to eliminate the risk of making a mistake.

Isn't coin control obsolete thanks to advancements in coinjoin technology?  When I make a transaction, there's no labels necessary because any coins being spent are completely isolated from other transactions I did.

[virasog]

Am I the only one who uses coin control as the default option? Whenever I want to make a payment, I start by selecting the UTXOs I wish to spend. There are lots of reasons you should do this over automatic selection. Privacy is the biggest one, as has been discussed already.

If you ask me, then I was not using the coin control until I knew about it. Even i may sometimes not use it for privacy reasons but it feels good to have full control over sending our coins from whichever UTXOs and it just creates a feeling that we know the most features than an ordinary Bitcoin wallet user. As i always check the mempool fee and manually select the fee, I will also manually select the address from which I will be sending the bitcoins.

Sometimes, you use the feature because you want to use it as it feels good to use it. I know most people won't understand or agree to me, but this is how I feel. Only bitcoin lovers can understand this feeling 

[satscraper]

BTW, FinCEN has issued  proposal to consider mixers as a threat to national security.  The  clauses from a) (page 8.) to f) (page 10) allow to get better view on how to obfuscate analyzing companies by building  transactions yourself rather by   looking up for mixer service. Particularly a) states :

This is where fake conjoin can help.

[stompix]

Am I the only one who uses coin control as the default option? Whenever I want to make a payment, I start by selecting the UTXOs I wish to spend. There are lots of reasons you should do this over automatic selection. Privacy is the biggest one, as has been discussed already. I want to spend specific UTXOs for specific things, and I definitely don't want my wallet automatically consolidating UTXOs I don't want spent together.

Coin control has same limitations depending on the user profile.
I use multiple wallets, the one I'm doing only deposits has no problem with it as I spend the entire output, makes no difference if I want to play around with $200 for a few bets on some Ascot festival or F1 circuit and I deposit $217, on that wallet I can safely control the coins perfectly.

But on my other messy wallet I use to buy cheap small things and pay vps and vpn subs, I end up with so many and so tiny outputs they are unusable, I batched them last week and 3 or 4 of them would have been a loss over 5sat/b

That aside I don't understand the privacy thing in this so-called conjoin.
Outputs a1,a2,a3,a4 which are let's suppose known are being consolidated into b1 2b b3, calling b1 a decoy...
How is that different from sending a1,a2,a3,a4 to c1 and then splitting that for payments?

If we assume ax are known everyone can see the trail of the coins, there is no privacy whatsoever, you could have just sent each output a1>b1, a2>b2 and then consolidated those it would have set the same level of privacy, which is approximately zero.

Isn't coin control obsolete thanks to advancements in coinjoin technology?  When I make a transaction, there's no labels necessary because any coins being spent are completely isolated from other transactions I did.

However they aren't at all in your example, there is a simple one tx link between them!

You are wrong, a mixer is a trusted third party, they do not provide you privacy.  The instances of mixers stealing their users confirm this fact, with the end result of having their users' transaction history given to government agencies: https://bitcoinmagazine.com/technical/how-authorities-found-bitfinex-bitcoin

Mixers are not offering some complete secrecy, they are used to break the links, if you're not stupid enough to, quoting from your article:

Lichtenstein would often open up accounts on bitcoin exchanges with fictitious identities. In one specific case, he allegedly opened eight accounts on a single exchange (Poloniex, according to Ergo), which at first were seemingly unrelated and not trivially linkable. However, all of those accounts shared multiple characteristics that, according to the complaint, gave the couple’s identity away.
First, all of the Poloniex accounts used the same email provider based in India and had “similarly styled” email addresses

The complaint also alleges that Lichtenstein joined multiple bitcoin withdrawals together from different Poloniex accounts into a single Bitcoin wallet cluster, after which he deposited into an account at a bitcoin exchange (Coinbase, according to Ergo), for which he had previously provided know-your-customer (KYC) information

However, the article also mentions:

There is also no record of using mixing services by the couple, which can’t erase past activity, but can provide good forward-looking privacy if done correctly.

Which is exactly the opposite of your claim!

[BitcoinsGreat]

So if the user aren't aware of coin control and no nothing about Consolidating UTXOs, that will have no impact on the use and also this does not suggests a bad future for the bitcoin.

Coin control is not important only for consolidating inputs. UTXO management is very important for privacy reasons too. Essentially coin control is like managing the dollar bills in your wallet. Would you pay for potatoes with a $100 bill? Probably not. What I mean is, it is much better to know how to do coin control rather than not. It doesn't suggest a bad future for the bitcoin, but rather a bad future for the coins' owner.

Many people even does not know that once they spend a certain bitcoin to a wallet, the rest of the coins are send to a change address. If this information is known to people, they may think of using the coin control feature much more than they are using it right now.

The only thing which the majority of people are concerned about the Tx fee they would need to spend and most of them even do not know the reason for the high transactions fee is that Bitcoin is stored in different UTXOs in a wallet and consolidating them at a time when mempool fee is low, can be a big money saver.

[satscraper]

consolidating them at a time when mempool fee is low, can be a big money saver.

Saving the money is not a lone  motive for consolidation  especially when the issues at hand are UTXOs relevant to hardware wallets which generally have the limited size of memory allocated for transaction data. If the given transaction has a huge number of UTXOs to sign and associated data don't fit the memory of HW, the  latter will refuse to proceed with signing and stall out.

[apogio]

I prefer to just use multiple wallets for different things and not connect KYC coins with non-KYC coins, for example. Wallet creation is free, use a new one (and new addresses from it) only for a specific purpose. For instance, my Sinbad signature payments go into a new wallet that's got nothing to do with my non-public addresses, private investments or my other coins I am holding for whatever reason in completely different wallets. If I do consolidations and mixing, I will still not connect those "different-purpose" coins unless I have a reason why I am doing that or don't care.   

The only problem I see here is that you have to manage multiple backups because each wallet has a different seed phrase

Alternatively you could use less wallets and create various accounts for each wallet. For instance Wallet A could be the payments wallets as you said and each account could be known to the "real life instance - company" that you pay or get paid from. Thus, Wallet A - Account 0 could be for payments with company A, Account 1 could be for company B etc.

Then you could use wallet B for different reason and also use various accounts of wallet B.


This is much easier to manage.

[Pmalek]

The only problem I see here is that you have to manage multiple backups because each wallet has a different seed phrase

Alternatively you could use less wallets and create various accounts for each wallet.

That's exactly what I do, but in my previous message I didn't call them accounts so as not to create confusion and make people think of custodial accounts on exchanges for example. I see that it still created confusion, though. Hardware wallet users will be familiar with the term 'accounts' referring to a new Bitcoin account at a different derivation path (+1) than the previous one. It still feels weird sometimes using that terminology.