In a transactiontransaction - A transaction spending satoshis., the spender and receiver each reveal to each other all public keyspublic keys - The public portion of a keypair which can be used to verify signatures made with the private portion of the keypair. or addressesaddresses - A 20-byte hash formatted using base58check to produce either a P2PKH or P2SH Dash address. Currently the most common way users exchange payment information. used in the transaction. This allows either person to use the public block chainblock chain - A chain of blocks with each block referencing the block that preceded it. The most-difficult-to-recreate chain is the best block chain. to track past and future transactions involving the other person's same public keys or addresses.
If the same public key is reused often, as happens when people use Dash addresses (hashed public keys) as static payment addresses, other people can easily track the receiving and spending habits of that person, including how many duffsduffs - Denominations of Dash value, usually measured in fractions of a dash but sometimes measured in multiples of a duff. One dash equals 100,000,000 duffs. they control in known addresses.
It doesn't have to be that way. If each public key is used exactly twice---once to receive a payment and once to spend that payment---the user can gain a significant amount of financial privacy.
Even better, using new public keys or unique addressesunique addresses - Address which are only used once to protect privacy and increase security. when accepting payments or creating change outputs can be combined with other techniques discussed later, such as PrivateSendPrivateSend - PrivateSend is a masternode managage, decentralized mixer for creating an on-demand system of removing the history from coins on the network. PrivateSend mixes inputs while allowing each participant to retain control of their coins at all times so the process can be done without trusting a third party. or merge avoidance, to make it extremely difficult to use the block chain by itself to reliably track how users receive and spend their duffs.
Avoiding key reuse can also provide security against attacks which might allow reconstruction of private keysprivate keys - The private portion of a keypair which can create signatures that other people can verify using the public key. from public keys (hypothesized) or from signature comparisons (possible today under certain circumstances described below, with more general attacks hypothesized).
Unique (non-reused) P2PKHP2PKH - A Dash payment address comprising a hashed public key, allowing the spender to create a standard pubkey script that Pays To PubKey Hash (P2PKH). and P2SHP2SH - A Dash payment address comprising a hashed script, allowing the spender to create a standard pubkey script that Pays To Script Hash (P2SH). The script can be almost any valid pubkey script. addresses protect against the first type of attack by keeping ECDSA public keys hidden (hashed) until the first time duffs sent to those addresses are spent, so attacks are effectively useless unless they can reconstruct private keys in less than the hour or two it takes for a transaction to be well protected by the block chain.
Unique (non-reused) private keys protect against the second type of attack by only generating one signature per private key, so attackers never get a subsequent signature to use in comparison-based attacks. Existing comparison-based attacks are only practical today when insufficient entropy is used in signing or when the entropy used is exposed by some means, such as a side-channel attack.
So, for both privacy and security, we encourage you to build your applications to avoid public key reuse and, when possible, to discourage users from reusing addresses. If your application needs to provide a fixed URI to which payments should be sent, please use
dash: URIs as defined by BIP21.
Updated about a year ago