BIP44: What's the use of internal addresses?
I've read other questions (and their answers) on this but I still don't see the use for internal addresses. I get that you're supposed to send the change of a transaction there but I don't see how this benefits you, all it does is move your remaining funds on an address, right? And you could just as easily move your funds to a new external address. I understand that the point is to use an address only once, but that can also be done with external addresses.
I hope that somebody can explain what benefits internal addresses have,
Thanks in advance!
bitcoin-core bitcoin-cash bitcoincore-development bip
asked 8 hours ago
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I've read other questions (and their answers) on this but I still don't see the use for internal addresses. I get that you're supposed to send the change of a transaction there but I don't see how this benefits you, all it does is move your remaining funds on an address, right? And you could just as easily move your funds to a new external address. I understand that the point is to use an address only once, but that can also be done with external addresses.
I hope that somebody can explain what benefits internal addresses have,
Thanks in advance!
bitcoin-core bitcoin-cash bitcoincore-development bip
asked 8 hours ago
timgfxtimgfx
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
I've read other questions (and their answers) on this but I still don't see the use for internal addresses. I get that you're supposed to send the change of a transaction there but I don't see how this benefits you, all it does is move your remaining funds on an address, right? And you could just as easily move your funds to a new external address. I understand that the point is to use an address only once, but that can also be done with external addresses.
I hope that somebody can explain what benefits internal addresses have,
Thanks in advance!
bitcoin-core bitcoin-cash bitcoincore-development bip
asked 8 hours ago
timgfxtimgfx
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
I've read other questions (and their answers) on this but I still don't see the use for internal addresses. I get that you're supposed to send the change of a transaction there but I don't see how this benefits you, all it does is move your remaining funds on an address, right? And you could just as easily move your funds to a new external address. I understand that the point is to use an address only once, but that can also be done with external addresses.
I hope that somebody can explain what benefits internal addresses have,
Thanks in advance!
bitcoin-core bitcoin-cash bitcoincore-development bip
bitcoin-core bitcoin-cash bitcoincore-development bip
asked 8 hours ago
timgfxtimgfx
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
timgfxtimgfx
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
timgfxtimgfx
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
timgfxtimgfx
232
asked 8 hours ago
timgfxtimgfx
232
232
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
timgfx is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
add a comment |
2 Answers
2
active
oldest
votes
The separation between internal and external addresses comes from BIP32.
Using a different chain for each permits you to give out an xpub for just the external ones to an auditor. They would then be able to observe your incoming payments, but not your spending.
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
add a comment |
In order to keep track of who sent you how much money you make sure to hand out an address only once and make a note of who you handed out the address to in your wallet software. This way all funds sent to a particular address are attributed to a particular party. Now if your wallet was using external chain addresses for change you wouldn't be able to track who sent you how much.
As for why there is change at all it's because unspent outputs can only be spent in their entirety so if you don't want to send the entire amount to the recipient you have to receive the excess as change back to yourself. There are two related articles on the wiki about this called change and coin analogy that you might want to read.
answered 7 hours ago
AbdussamadAbdussamad
1,541616
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
add a comment |
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2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
The separation between internal and external addresses comes from BIP32.
Using a different chain for each permits you to give out an xpub for just the external ones to an auditor. They would then be able to observe your incoming payments, but not your spending.
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
add a comment |
The separation between internal and external addresses comes from BIP32.
Using a different chain for each permits you to give out an xpub for just the external ones to an auditor. They would then be able to observe your incoming payments, but not your spending.
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
add a comment |
The separation between internal and external addresses comes from BIP32.
Using a different chain for each permits you to give out an xpub for just the external ones to an auditor. They would then be able to observe your incoming payments, but not your spending.
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
The separation between internal and external addresses comes from BIP32.
Using a different chain for each permits you to give out an xpub for just the external ones to an auditor. They would then be able to observe your incoming payments, but not your spending.
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
answered 7 hours ago
Pieter WuillePieter Wuille
46.6k399156
46.6k399156
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
add a comment |
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Ah that makes a lot of sense! Thank you!
– timgfx
7 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
Another question: when sending some BTC to somebody should you prioritize internal or external funds? My guess would be external because then you'd get more internal funds making your transaction history more private, but I'm not certain
– timgfx
6 hours ago
add a comment |
In order to keep track of who sent you how much money you make sure to hand out an address only once and make a note of who you handed out the address to in your wallet software. This way all funds sent to a particular address are attributed to a particular party. Now if your wallet was using external chain addresses for change you wouldn't be able to track who sent you how much.
As for why there is change at all it's because unspent outputs can only be spent in their entirety so if you don't want to send the entire amount to the recipient you have to receive the excess as change back to yourself. There are two related articles on the wiki about this called change and coin analogy that you might want to read.
answered 7 hours ago
AbdussamadAbdussamad
1,541616
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
add a comment |
In order to keep track of who sent you how much money you make sure to hand out an address only once and make a note of who you handed out the address to in your wallet software. This way all funds sent to a particular address are attributed to a particular party. Now if your wallet was using external chain addresses for change you wouldn't be able to track who sent you how much.
As for why there is change at all it's because unspent outputs can only be spent in their entirety so if you don't want to send the entire amount to the recipient you have to receive the excess as change back to yourself. There are two related articles on the wiki about this called change and coin analogy that you might want to read.
answered 7 hours ago
AbdussamadAbdussamad
1,541616
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
add a comment |
In order to keep track of who sent you how much money you make sure to hand out an address only once and make a note of who you handed out the address to in your wallet software. This way all funds sent to a particular address are attributed to a particular party. Now if your wallet was using external chain addresses for change you wouldn't be able to track who sent you how much.
As for why there is change at all it's because unspent outputs can only be spent in their entirety so if you don't want to send the entire amount to the recipient you have to receive the excess as change back to yourself. There are two related articles on the wiki about this called change and coin analogy that you might want to read.
answered 7 hours ago
AbdussamadAbdussamad
1,541616
In order to keep track of who sent you how much money you make sure to hand out an address only once and make a note of who you handed out the address to in your wallet software. This way all funds sent to a particular address are attributed to a particular party. Now if your wallet was using external chain addresses for change you wouldn't be able to track who sent you how much.
As for why there is change at all it's because unspent outputs can only be spent in their entirety so if you don't want to send the entire amount to the recipient you have to receive the excess as change back to yourself. There are two related articles on the wiki about this called change and coin analogy that you might want to read.
answered 7 hours ago
AbdussamadAbdussamad
1,541616
answered 7 hours ago
AbdussamadAbdussamad
1,541616
answered 7 hours ago
AbdussamadAbdussamad
1,541616
answered 7 hours ago
AbdussamadAbdussamad
1,541616
1,541616
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
add a comment |
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
Ah, so you mean that you give one receiving address to one person that they will use whenever they need to send you money so you have addresses per person that sends you money instead of an address per transaction (receive + send)?
– timgfx
7 hours ago
add a comment |
timgfx is a new contributor. Be nice, and check out our Code of Conduct.
timgfx is a new contributor. Be nice, and check out our Code of Conduct.
timgfx is a new contributor. Be nice, and check out our Code of Conduct.
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