HD Wallets: Private Keys vs Public Keys

[Furball808]

I made a thread before about what life was like before seed phrase and I mentioned there briefly the BIP32 or the arrival of Hierarchical Deterministic Wallets.

Comes in the BIP32 (bitcoin improvement proposal) that introduces a new type of wallet. Hierarchical Deterministic (HD) wallet allows us to have access to multiple private keys with only one master key. Instead of having to back up multiple private keys, you only need now one master key to have access to them all. This solved the issue of Just A Bunch of Keys system which what wallets used to have.

Since, I focused on how seed phrase came to be I thought it would be a good idea to dive deeper this time into Hierarchical Deterministic Wallet.

The passage itself is a summary. This BIP32 allowed for us to generate multiple private keys or "accounts" from only one private or master key. From each private key generated from the master key comes a public key/public address. _{(For those confused, a public address is the shortened version of the public key.)} This public address is the one we share to the public so they can send crypto to that address. Here is an example of a public address:

Code:

1BvBPSEYmtWeeqTFn5Au5y4GFg7xJaNVN2

_[2]

This is what we typically see on blockchain explorer. But take note that just because public addresses are visible to everyone doesn't mean anyone can have access to your wallet. People can however see the entire transaction history of that specific public address.

Are public addresses safe to share?

I will discuss what we call The Trapdoor Function. The trapdoor function is a function easy to compute in one direction but almost impossible to compute in the opposite direction without a specific information. This is a concept within the broad cryptography. How cryptocurrency works may be better understood with this in mind however, cryptocurrency like Bitcoin does not literally follow the trapdoor function but follows a similar concept of one-way computation which is called the Elliptic Curve Cryptography._[1]

Now this algorithm is a lot more complicated than my simple explanation of a trapdoor function. Think of ECC as this:

The main idea behind the algorithm is “dotting” a point with itself some relatively large number of times.

Let's say you have your private key, this private key is a number. You then dot a point within the elliptical curve the number of times your private key is which would generate your public key. A private key is a number priv, and a public key is the public point dotted with itself priv times._[3]

How does a public key become a public address?

This is where the process of hashing comes in. What happens in hashing is data is passed through a specific algorithm called the SHA-256 algorithm which transforms the public key to become a public address. _[4]

In conclusion, your private key is your lifeline. This is what you should keep safe and not give out to random people. Your public key is public to everyone and this will not put your wallet in danger. Personally, the complexity of cryptocurrency and the intentionality of each step makes me in awe even though I know I have barely scratched the surface.

Sources:
[1] Public Address Meaning
[2] A (Relatively Easy To Understand) Primer on Elliptic Curve Cryptography
[3] Elliptic Curve Cryptography
[4] What is public key cryptography?

[MusaMohamed]

I made a thread before about what life was like before seed phrase and I mentioned there briefly the BIP32 or the arrival of Hierarchical Deterministic Wallets.

I believe the three sources are better for your references when writing about BIP32 and HD wallets.

https://github.com/bitcoinbook/bitcoinbook/blob/develop/ch05_wallets.adoc#hierarchical-deterministic-hd-key-generation-bip32
https://learnmeabitcoin.com/technical/keys/hd-wallets/
https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki

[Cookdata]

_{(For those confused, a public address is the shortened version of the public key.)} This public address is the one we share to the public so they can send crypto to that address. Here is an example of a public address:

Code:

1BvBPSEYmtWeeqTFn5Au5y4GFg7xJaNVN2

_[2]

You did well but the wallet address or public address like you said isn't a shorten version of the public key but the public key hash. The public key is hash with sha256 and Ripemd160 functions to give public key hash. It's that hash that is encoded to give you an address format.

Like the wallet address you posted above, you can decode it to give you the public key hash but you can't get the public key of the address unless the address has received and sent out some Bitcoin transactions.

[Charles-Tim]

Your public key is public to everyone and this will not put your wallet in danger.

How about quantum computer's threat of the possibility to derive private key from its public key? This is not possible now, but it has remain one of the major discussions in the bitcoin community as it can be possible in the future.

Address public key can not be known to anyone until the person spends from the address, this is the reason address reuse is not advisable.

I do not like that you indicated address as something similar to public key. People should not let anyone know their public keys, but they can give people their bitcoin address.

[dkbit98]

How about quantum computer's threat of the possibility to derive private key from its public key? This is not possible now, but it has remain one of the major discussions in the bitcoin community as it can be possible in the future.

This could be realistic threat in next few years, especially if anyone spent and sent coins from their addresses.
Bitcoin developers are taking this seriously with new BIP-360 proposal, and I already saw some wallets are planning to add them.
In the mean while best alternative is to send coins to new never before used addresses.

[Mia Chloe]

Like the wallet address you posted above, you can decode it to give you the public key hash but you can't get the public key of the address unless the address has received and sent out some Bitcoin transactions.

Yeah I also agree with this. Although nodes you are connected to can see a lot of data including your IP address your public keys only become visible after a transaction. I believe  that's because you create a transaction your public key is actually revealed in the transaction signature so others can verify it.

~snip

There was a time in the past when wallets did support receiving with public keys but that didn't last because of the privacy risks and it's part of the reasons we got an HD upgrade too.

[nc50lc]

_{(For those confused, a public address is the shortened version of the public key.)} This public address is the one we share to the public so they can send crypto to that address.
Sources:
[1] Public Address Meaning

Ah, so that 3-year-old reference from Ledger must be the major cause of newbies calling an "Address"; "Public Address".
It causes nothing but confusion between public key and address.

I'd recommend OP to just drop the "public" in the term, it's more proper to call it "address" instead of "public address".
Maybe applicable if you're calling it your 'publicly shared address' like your donation address, but the address itself should be called "address" or better "bitcoin address" if specific to Bitcoin.

Then it would be great if you can give some examples of a public key and all Bitcoin address types to show which is which.

Here's a related thread that you might find useful: /index.php?topic=5163864.0

This is where the process of hashing comes in. What happens in hashing is data is passed through a specific algorithm called the SHA-256 algorithm which transforms the public key to become a public address. _[4]
[4] What is public key cryptography?

In this part, you must follow the reference properly or it'll result with false information.
Because hashing the public key with just SHA256 wont generate a standard P2PKH (your example) or P2WPKH address.

[Upgrade00]

In conclusion, your private key is your lifeline. This is what you should keep safe and not give out to random people. Your public key is public to everyone and this will not put your wallet in danger.

It's good to note that the public key only becomes public after you make/sign a transaction which is broadcasted to the network. If you only receive through your wallet address your public key will not be accessible to the public. This is one of the extra security that a cold wallet offers, you rarely send out of them as opposed to your hot wallet you use regularly to send and receive

[Charles-Tim]

It's good to note that the public key only becomes public after you make/sign a transaction which is broadcasted to the network. If you only receive through your wallet address your public key will not be accessible to the public. This is one of the extra security that a cold wallet offers, you rarely send out of them as opposed to your hot wallet you use regularly to send and receive

Cold or hot wallet does not mean anything about this as long as you are not reusing your bitcoin addresses. If you receive coin on an address, and you spend part of the coin, the change will be sent to another address in the same transaction. The change address public key will not be known to the public until you spend from it and the new change will be sent to another change address in the new transaction. What that is important is not to reuse bitcoin addresses.

[Upgrade00]

<snip>

Hot wallets are basically used very often to send and receive, so most likely you have sent out a transaction which reveals the public key. A cold storage if used right is mostly offline and doesn't send out transactions often or at all.
You can have a small portion of your funds in your hot wallet for regular expenses and have the bulk in cold storage which you only send to.

Not reusing Bitcoin addresses is good practice but not always easy to do depending on how much you need to send out at a point in time

[Charles-Tim]

Hot wallets are basically used very often to send and receive, so most likely you have sent out a transaction which reveals the public key. A cold storage if used right is mostly offline and doesn't send out transactions often or at all.
You can have a small portion of your funds in your hot wallet for regular expenses and have the bulk in cold storage which you only send to.

Not reusing Bitcoin addresses is good practice but not always easy to do depending on how much you need to send out at a point in time

If someone have a cold wallet and he mistakenly reuse the bitcoin address that he has spent from, that will expose him to the same quantum computer threat. It is not about hot or cold wallet, it is just about not reusing your bitcoin addresses.

Yes, it is hard not to reuse bitcoin addresses, example is payments of salaries and payments of participants in signature campaigns on this forum. There have been different proposals that will make the quantum bitcoin cryptocurrency vulnerability not possible in the future. Let us see what will happen with BIP 360.