Public key compression is illustrated in Figure This compressed public key corresponds to the same private key, meaning it is generated from the same private key. However, it looks different from the uncompressed public key. This can be confusing, because it means that a single private key can produce a public key expressed in two different formats compressed and uncompressed that produce two different bitcoin addresses.
However, the private key is identical for both bitcoin addresses. Compressed public keys are gradually becoming the default across bitcoin clients, which is having a significant impact on reducing the size of transactions and therefore the blockchain. However, not all clients support compressed public keys yet. Newer clients that support compressed public keys have to account for transactions from older clients that do not support compressed public keys.
This is especially important when a wallet application is importing private keys from another bitcoin wallet application, because the new wallet needs to scan the blockchain to find transactions corresponding to these imported keys. Which bitcoin addresses should the bitcoin wallet scan for? The bitcoin addresses produced by uncompressed public keys, or the bitcoin addresses produced by compressed public keys? Both are valid bitcoin addresses, and can be signed for by the private key, but they are different addresses!
To resolve this issue, when private keys are exported from a wallet, the WIF that is used to represent them is implemented differently in newer bitcoin wallets, to indicate that these private keys have been used to produce compressed public keys and therefore compressed bitcoin addresses. This allows the importing wallet to distinguish between private keys originating from older or newer wallets and search the blockchain for transactions with bitcoin addresses corresponding to the uncompressed, or the compressed, public keys, respectively.
That is because the private key has an added one-byte suffix shown as 01 in hex in Table , which signifies that the private key is from a newer wallet and should only be used to produce compressed public keys. Private keys are not themselves compressed and cannot be compressed. Notice that the hex-compressed private key format has one extra byte at the end 01 in hex. While the Base58 encoding version prefix is the same 0x80 for both WIF and WIF-compressed formats, the addition of one byte on the end of the number causes the first character of the Base58 encoding to change from a 5 to either a K or L.
Think of this as the Base58 equivalent of the decimal encoding difference between the number and the number While is one digit longer than 99, it also has a prefix of 1 instead of a prefix of 9. As the length changes, it affects the prefix.
In Base58, the prefix 5 changes to a K or L as the length of the number increases by one byte. Remember, these formats are not used interchangeably. In a newer wallet that implements compressed public keys, the private keys will only ever be exported as WIF-compressed with a K or L prefix. If the wallet is an older implementation and does not use compressed public keys, the private keys will only ever be exported as WIF with a 5 prefix. The goal here is to signal to the wallet importing these private keys whether it must search the blockchain for compressed or uncompressed public keys and addresses.
If a bitcoin wallet is able to implement compressed public keys, it will use those in all transactions. The private keys in the wallet will be used to derive the public key points on the curve, which will be compressed. The compressed public keys will be used to produce bitcoin addresses and those will be used in transactions. When exporting private keys from a new wallet that implements compressed public keys, the WIF is modified, with the addition of a one-byte suffix 01 to the private key.
They are not compressed; rather, WIF-compressed signifies that the keys should only be used to derive compressed public keys and their corresponding bitcoin addresses. The code uses a predefined private key to produce the same bitcoin address every time it is run, as shown in Example If you used the uncompressed public key instead, it would produce a different bitcoin address 14K1y…. The most comprehensive bitcoin library in Python is pybitcointools by Vitalik Buterin. Example shows the output from running this code.
Example is another example, using the Python ECDSA library for the elliptic curve math and without using any specialized bitcoin libraries. Example shows the output produced by running this script. Example uses os. Caution: Depending on the OS, os. In the following sections we will look at advanced forms of keys and addresses, such as encrypted private keys, script and multisignature addresses, vanity addresses, and paper wallets.
Private keys must remain secret. The need for confidentiality of the private keys is a truism that is quite difficult to achieve in practice, because it conflicts with the equally important security objective of availability. Keeping the private key private is much harder when you need to store backups of the private key to avoid losing it. A private key stored in a wallet that is encrypted by a password might be secure, but that wallet needs to be backed up.
At times, users need to move keys from one wallet to another—to upgrade or replace the wallet software, for example.
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But what if the backup itself is stolen or lost? These conflicting security goals led to the introduction of a portable and convenient standard for encrypting private keys in a way that can be understood by many different wallets and bitcoin clients, standardized by BIP see Appendix C. BIP proposes a common standard for encrypting private keys with a passphrase and encoding them with Base58Check so that they can be stored securely on backup media, transported securely between wallets, or kept in any other conditions where the key might be exposed.
The standard for encryption uses the Advanced Encryption Standard AES , a standard established by the NIST and used broadly in data encryption implementations for commercial and military applications. The result of the BIP encryption scheme is a Base58Check-encoded encrypted private key that begins with the prefix 6P. If you see a key that starts with 6P , it is encrypted and requires a passphrase in order to convert decrypt it back into a WIF-formatted private key prefix 5 that can be used in any wallet. Many wallet applications now recognize BIPencrypted private keys and will prompt the user for a passphrase to decrypt and import the key.
Third-party applications, such as the incredibly useful browser-based Bit Address Wallet Details tab , can be used to decrypt BIP keys. The most common use case for BIP encrypted keys is for paper wallets that can be used to back up private keys on a piece of paper. Test the encrypted keys in Table using bitaddress.
Wallets — Bitcoin
They designate the beneficiary of a bitcoin transaction as the hash of a script, instead of the owner of a public key. The feature was introduced in January with BIP see Appendix C , and is being widely adopted because it provides the opportunity to add functionality to the address itself. The requirements are designated at the time the address is created, within the script, and all inputs to this address will be encumbered with the same requirements. Encoding a P2SH address involves using the same double-hash function as used during creation of a bitcoin address, only applied on the script instead of the public key:.
P2SH is not necessarily the same as a multisignature standard transaction. A P2SH address most often represents a multi-signature script, but it might also represent a script encoding other types of transactions. Currently, the most common implementation of the P2SH function is the multi-signature address script. As the name implies, the underlying script requires more than one signature to prove ownership and therefore spend funds. For example, Bob the coffee shop owner from Chapter 1 could use a multisignature address requiring 1-of-2 signatures from a key belonging to him and a key belonging to his spouse, ensuring either of them could sign to spend a transaction output locked to this address.
Or Gopesh, the web designer paid by Bob to create a website, might have a 2-of-3 multisignature address for his business that ensures that no funds can be spent unless at least two of the business partners sign a transaction. We will explore how to create transactions that spend funds from P2SH and multi-signature addresses in Chapter 6. Vanity addresses are valid bitcoin addresses that contain human-readable messages.
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Vanity addresses require generating and testing billions of candidate private keys, until a bitcoin address with the desired pattern is found. Although there are some optimizations in the vanity generation algorithm, the process essentially involves picking a private key at random, deriving the public key, deriving the bitcoin address, and checking to see if it matches the desired vanity pattern, repeating billions of times until a match is found.
Once a vanity address matching the desired pattern is found, the private key from which it was derived can be used by the owner to spend bitcoin in exactly the same way as any other address. Vanity addresses are no less or more secure than any other address. You can no more easily find the private key of an address starting with a vanity pattern than you can any other address. There are approximately 58 29 approximately 1. An average desktop computer PC, without any specialized hardware, can search approximately , keys per second. Each additional character increases the difficulty by a factor of Patterns with more than seven characters are usually found by specialized hardware, such as custom-built desktops with multiple GPUs.
Another way to find a vanity address is to outsource the work to a pool of vanity miners, such as the pool at Vanity Pool. A pool is a service that allows those with GPU hardware to earn bitcoin searching for vanity addresses for others.
For a small payment 0. Generating a vanity address is a brute-force exercise: try a random key, check the resulting address to see if it matches the desired pattern, repeat until successful. The random number generator used here is for demonstration purposes, and it is not appropriate for generating production-quality bitcoin keys as it is not implemented with sufficient security.
Change the search pattern in the source code and see how much longer it takes for four- or five-character patterns!
Vanity addresses can be used to enhance and to defeat security measures; they are truly a double-edged sword. Used to improve security, a distinctive address makes it harder for adversaries to substitute their own address and fool your customers into paying them instead of you. Unfortunately, vanity addresses also make it possible for anyone to create an address that resembles any random address, or even another vanity address, thereby fooling your customers. Eugenia could advertise a randomly generated address e. Or, she could generate a vanity address that starts with 1Kids, to make it more distinctive.
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In both cases, one of the risks of using a single fixed address rather than a separate dynamic address per donor is that a thief might be able to infiltrate your website and replace it with his own address, thereby diverting donations to himself. If you have advertised your donation address in a number of different places, your users may visually inspect the address before making a payment to ensure it is the same one they saw on your website, on your email, and on your flyer.
Using a vanity address generator, someone with the intent to steal by substituting a similar-looking address can quickly generate addresses that match the first few characters, as shown in Table So does a vanity address increase security?
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If Eugenia pays a pool to generate an 8-character vanity address, the attacker would be pushed into the realm of 10 characters, which is infeasible on a personal computer and expensive even with a custom vanity-mining rig or vanity pool. What is affordable for Eugenia becomes unaffordable for the attacker, especially if the potential reward of fraud is not high enough to cover the cost of the vanity address generation. Paper wallets are bitcoin private keys printed on paper. Often the paper wallet also includes the corresponding bitcoin address for convenience, but this is not necessary because it can be derived from the private key.