>
> One issue that I have is bandwidth: Electrum (and mycelium) cannot
> watch as many addresses as they want, because this will create too
> much traffic on the servers. (especially when servers send utxo merkle
> proofs for each address, which is not the case yet, but is planned)
>

This is surprising and the first time I've heard about this. Surely your
constraint is CPU or disk seeks? Addresses are small, I find it hard to
believe that clients uploading them is a big drain, and mostly addresses
that are in the lookahead region won't have any hits and so won't result in
any downloads?

This constraint is not so important for bloom-filter clients.


Bloom filters are a neat way to encode addresses and keys but they don't
magically let clients save bandwidth. A smaller filter results in less
upload bandwidth but more download (from the wallets perspective). So I'm
worried if you think this will be an issue for your clients: I haven't
investigated bandwidth usage deeply yet, perhaps I should.

FWIW the current bitcoinj HDW alpha preview pre-gens 100 addresses on both
receive and change branches. But I'm not sure what the right setting is.

We also have to consider latency. The simplest implementation from a
wallets POV is to step through each transaction in the block chain one at a
time, and each time you see an address that is yours, calculate the next
ones in the chain. But that would be fantastically slow, so we must instead
pre-generate a larger lookahead region and request more data in one batch.
Then you have to recover if that batch ends up using all the pre-genned
addresses. It's just painful.


> My opinion, as far as Electrum is concerned, is that merchant accounts
> should behave differently from regular user accounts: While merchants
> need to generate an unlimited number of receiving addresses, it is also
> acceptable for them to have a slightly more complex wallet recovery
> procedure
>

Maybe. I dislike any distinction between users and merchants though. I
don't think it's really safe to assume merchants are more sophisticated
than end users.


> but also because we want fully automated synchronization between different
> instances of a wallet, using only no other source of information than
> the blockchain.
>

I think such synchronization won't be possible as we keep adding features,
because the block chain cannot sync all the relevant data. For instance
Electrum already has a label sync feature. Other wallets need to compete
with that, somehow, so we need to build a way to do cross-device wallet
sync with non-chain data.