The Misconception of "From" Addresses in BTC

The Misconception of "From" Addresses in BTC

By fred_nurk | pragprog | 30 Jul 2021

    Most people like to view Bitcoin addresses like something analogous to a bank account. Like I alluded to in this post this is incorrect. Now I find this topic very crucial for the Bitcoin user and personally I find it very interesting. That is why in this post and in future posts I would like to go more in depth on the topic.


Define "from"....

    First of all, something that is quite clear is that unless you are mining, the Bitcoin you have was owned by someone else in the past. You would say the the BTC that you have received is from those previous owners. Bitcoin at its core doesn't not have the concept of a "from address" the closest this would be an address that received the BTC before you. The closest real world analogy would be when you deposit paper bills into your bank account, the bank account address would be the receiving address, but there wouldn't be a "from address".


The Misconception

    For starters, the concept of a "from address" implies linking reliably between transactions going down the chain. There are efforts of making Bitcoin as private as possible, the fact that you can link a transaction already creates a loss in privacy. So when you see a "from" or anything like that when you look up a transaction on a blockchain explorer, what you really are seeing is the last "to" address that had that BTC before you.


So what's the deal, the problem is that this misconception causes the arise to many privacy and security issues. It makes the receiver have an incorrect mindset of thinking they can reliably link a wallet address to an identity, reducing privacy; and on the other hand it promotes the reuse of a wallet address, reducing security.





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