From the ground up, Bittr was built to offer the easiest possible way to save bitcoin straight into your personal wallet. Our aim was to make the sign-up process as easy as possible and not ask for any more data than strictly necessary, hence our convenient four-step sign-up process as you know it:
Why didn’t Bittr implement extended public keys from the start?
Initially, we believed there isn’t much difference whether your recurring deposits all arrive to the same bitcoin address or to a new address for each deposit. After all, in both cases Bittr still knows where your bitcoin is going so from a privacy perspective between the customer and Bittr, there is no improvement. However, by giving support for extended public keys, only Bittr knows how much is in your bitcoin piggybank (which we knew anyways), as opposed to anyone who gets to learn your bitcoin address! It also makes the sign-up process slightly more complicated than it currently is, which is why we’ve left the default option to enter a single address and added a button for advanced users to enter an extended public key.
Why is it better to sign-up with an extended public key?
While asking for a single address makes our sign-up process quick and easy, it has one major drawback; it harms your privacy and security! As explained here, it is generally unadvised to re-use an address for two specific reasons. First of all, as the bitcoin blockchain is publicly accessible data, a malicious actor can know exactly how much is in your bitcoin piggybank that you’ve set up with Bittr as all the bitcoin are in the same address. Furthermore, in order to spend your bitcoin, a signature of your private key belonging to the address of your bitcoin piggybank will be on the blockchain. While this doesn’t pose an immediate threat on the security of your bitcoin, it may one day in the future as most cryptographic algorithms only have a limited lifetime. One day, the hashing algorithms of bitcoin might be broken, and your private keys may be obtained through brute-forcing the key with the signature information. It is therefore strongly recommended not to bitcoin to an address from which you have previously bitcoin. In simple terms, it’s almost like an old-fashioned piggybank which you can’t use anymore after you break it open to spend the money inside of the piggybank!.
Lessons learned from implementing extended public key support
First and foremost, a bitcoin address is simple! We can easily verify whether the address is valid, and all three types of addresses are supported by Bittr (legacy, P2SH or bech32). An extended public key on the other hand can come in all sorts of forms and shapes, starting with xpub, ypub or zpub. In theory, the initial letter (x,y,z) is supposed to indicate what kind of addresses should be generated:
- xpub6CZcSujFdNJ…: 16fMWsNo5RTtAN4fkrUxdRz7QpV5uVFf5G
- ypub6Y9SS2p2P9D…: 3D7nhpkNJjYAjGnQbAcoixSsF6ocU5ovHK
- zpub6sAr1xVNaq8…: bc1qeudj5k6rg6p9x69pgs6rrhw4wgywjgw675s336
Unfortunately, while testing our initial implementation, we figured out that Trezor and Ledger derive addresses in a different way. On both the Trezor and Ledger device, it’s extremely easy to create an additional account to your wallet and only use this account for transactions with Bittr! Therefore, we’ve pre-generated the configuration options so you only have to select the Trezor/Ledger option and copy/paste the xpub! If you use a different wallet, you can also manually select the type of addresses you’d like us to generate, as well as the exact derivation path. We will show you the first three addresses that we’re able to generate based on your preferences so you can verify whether these addresses match with the ones shown in your wallet.
Since Bittr is a financial industry company, we are required to keep your data for 7 years. Because of this we wanted to be extremely careful when it comes to your privacy! Improper use of extended public keys may lead to exposing all of your historical and future bitcoin transactions. We have therefore implemented this tool (thanks dan-da!) to check whether the extended public key you’re about to submit to Bittr has been used before. If the key has been used, we will not store it and you cannot continue the sign-up process, in the interest of your own privacy. We have also made a small contribution to the tool, in order to use our own instance of Esplora (thanks Blockstream), so that we don’t leak your addresses to any third party!
Can I use my extended public key to update my current deposit code?
The personal deposit code you’ve previously created during sign-up with Bittr is tied to the bitcoin address you’ve signed up with and cannot be changed after a deposit code has been used. However, we strongly urge you to register again and use our new extended public key functionality to improve your privacy and security!
Are you having difficulties, or did you spot a mistake we’ve made in the process? Do let uw know!
Originally published at https://getbittr.com on September 12, 2020.