Date: Thu, 16 Jan 2014 12:42:42 +0100
From: Adam Back <adam@cypherspace.org>
To: Jeremy Spilman <jeremy@taplink.co>
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Cc: "bitcoin-development@lists.sourceforge.net"
	<bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] unlinakble static address? & spv-privacy
 (Re: Stealth Addresses)
Precedence: list

On Wed, Jan 15, 2014 at 05:02:10PM -0800, Jeremy Spilman wrote:
>The second pubKey is useful [...] even just being able to scan for
>transactions yourself without keeping bitcoin-encumbered private keys
>decrypted in memory.

Agreed.

>On Wed, 15 Jan 2014 15:09:01 -0800, Adam Back <adam@cypherspace.org> wrote:
>>But I think its moderately expensive for the full node because it has to
>>do a DH calculation per transaction and its not precomputable so there is
>>IO per query.  (In the P version in fact only payments which are thereby
>>reconizable as unlinkable static need to be processed).
>
>And of course, if you have multiple reuseable addresses, then you're 
>doing this calculation separately to check each one.
>
>So the load on a popular centralized service would be quite high, 
>which you may consider a feature.

Well only a linear increase, which is not any kind of realistic security
defense for even an academic researcher analysing flows.  More concern is
that it could be expensive enough discourage adoption by full-nodes as an
open/free service to support SPV clients in finding their reusable address
payments.  Its possibly an I/O DoS multiplier: send requests to the full
nodes at a moderate network rate and and watch as its disk thrashes.

>But I think it's great people can choose how to trade privacy for 
>computation/bandwidth however they want, and services can compete to 
>offer monitoring for 0+ bit prefixes.

Its not a decision with user localised effect.  If most users use it with
parameters giving high elimination probability, that affects everyone else's
privacy also.  Also statistical effects are accumulative as more plausibly
related addresses are eliminated at each potentially linked transaction.  I
think once the network flow analysis guys are done with incorporating it,
and if reusable addresses saw significant use, my prediction is the result
will be pretty close to privacy game over and it will undo most if not all
of the hard-won privacy benefit of CoinJoin.  (Recalling CoinJoin is only
adding a bit or two of entropy per join, this elimination effect could
easily undo more than that).

>>(And also there is proposed a version of the prefix computed via
>>brute-force to make it somewhat stealthy still).
>
>I think in this case the hash grinding of the prefix would only being 
>used if thats how transactions are being indexed. I don't think it 
>adds any privacy, it's just added work we're forced to do in order 
>for the prefix to work as designed. 

The point of the stealth security objective is to avoid creating a new and
smaller anonymity set.  If all reusable addresses are easily recognizable as
reusable, thats far more revealing and useful to the network flow analysis.

Adam