Questions about altcoins are off-topic here, but the answer is essentially universal: if you re-use addresses, especially because of a desire to think of them as a long-term identity, you're effectively giving up any hope of even rudimentary on-chain privacy. Privacy is hard, and certainly not a given even without address reuse, but with it, there is little hope to be begin with.
Another frequently brought up argument, though cargo-cult in my opinion, is that address reuse also has meaningful security implications. The reasoning is that if public keys aren't exposed, they aren't subject to attacks to compute the corresponding private key (the hash would need to be reversed first, which is presumed to be (even) hard(er)). My counter is that most interesting use cases of Bitcoin already involve sharing public keys with non-trusted parties, so we need to make sure that things remain secure even with revealed public keys anyway - and there is no reason to assume that isn't the case.
There have been some efforts to move away from the term "address" for this very reason - addresses do have a notion of permanence / identity associated with them, and some believe that thinking about them differently (e.g. by calling them "invoice identifiers") may improve the situation. I believe efforts like this are well-intended, but the time to change the terminology was about 10 years ago. Now it's so ingrained it's unlikely to swap it out.
That said, most wallet software these days does a pretty good job at not reusing addresses, e.g. by giving out a new address every time one is requested, and making it hard to list historical ones. Most reuse I believe is due to services/"hosted" wallets where users have accounts, where changing addresses is less common than in wallet software proper.
There is no financial impact on the user from address cycling: using a new address for every incoming payment has no higher (or lower, for that matter) fee associated with it than always using the same one, due to the fact that Bitcoin uses a UTXO model. The downsides of address cycling are purely in convenience, user experience, and implementation complexity:
- Wallet software needs to be more complicated to maintain possibly large sets of addresses. While the UX likely makes it seem that the address changes every time, you do want it to actually keep around the ability to receive coins to all old addresses and spend those, because who knows how long the sender keeps it around before using it (or worse, reuses it).
- Backups are more complicated by the fact that newly generated addresses need to be recoverable. This is what led to the development of deterministic key wallets, which generate all keys/addresses from a single seed or master key. That means that one backup suffices for all future addresses too. A downside, as mentioned in RedGrittyBrick's answer, is what is called the gap limit: wallets will only look ahead a limited number of "future" addresses, which may result in missed recovery if a backup is restored with 100s or 1000s of previously given-out-but-never-received-to addresses.
- User understanding is complicated, especially when presented with block explorer websites, which use an "address balance" model. The more private wallet-is-a-collection-of-otherwise-unlinkable-addresses model effectively used by constantly-refreshing-address-wallets doesn't match neatly to this address balance model, leading to complications in understanding, and sometimes lost funds (because people e.g. backup only the private key to "their" single address, not knowing they also need the private keys for addresses that the wallet automatically sends change to.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments