On Mon, Jan 13, 2014 at 02:59:08PM -0500, Alan Reiner wrote:
> How is this different from the proposal I have made?
> 
> You distribute the root public key (but not chaincode!) of a BIP32
> branch.  You can put your root key on a business card if you want.  Then
> when someone wants to pay you, you simply give them the multiplier and
> root key (they already have the root key, but should verify).  The
> multiplier does not reveal the chaincode, thus keeping it private, but
> it does allow them to confirm that the final address they are paying is
> derived from that root key they know belongs to you ("Please pay address
> X; oh btw, X=rootKey*mult").
> 
> You can /choose/ to reveal that a given payment address is linked to
> your root key without any compromise of privacy.  Or you can choose to
> ignore it and just give them a bare address the old way and still
> maintain privacy.  What advantages does "stealth addresses" have over
> this scheme?  You could extend it using some kind of deterministic
> sub-branching and/or ECDH to create multiple payment addresses without
> querying the payee. 

Basically stealth addresses *are* your scheme, using the blockchain as a
low or even no overhead communication channel for the payor to give the
payee that multiplier without bidirectional communication.

In the business card example I can't easily take your business card and
just send you some money without that transaction being linked to public
information. (your business card)

> I had planned to implement this system and push for people to accept it
> because I don't see any downsides to it.  It can easily be integrated
> into a WoT (with signed root keys), or CA system piggybacking on SSL.

WoT is a perfect example of the problem: if you put BIP32 branch payment
info into my OpenPGP key I can't pay you securely and reliably without
making the transaction public. The best I can do is pick a nonce and pay
X=rootKey*nonce, communicating to you the nonce later - this isn't
reliable because if I or you lose the nonce the funds are lost.

With stealth addresses the user experience can be as simple as you
telling me on the phone "hey! send me that 0.234 BTC you owe me!", me
clicking on "Send to Alan Reiner (verified by PGP)" (perhaps again on my
off-line second factor device for a multi-sig wallet) and tellling you
"OK, sent".

Even if your phone has been wiretapped, the attacker still didn't learn
exactly what transaction was actually used to make the payment - a big
advantage over per-tx nonce stuff.

-- 
'peter'[:-1]@petertodd.org
00000000000000023d5a8bbe131414328a6c50a2741933ba03775afd3c3db395