How ’70s Cryptography Could Improve Bitcoin in 2016 and Beyond


As long as a system requires technical expertise for operation, it will be relegated to use by a small group of technologists.

If every person who walked onto an elevator was presented with a keyboard and DOS-style command line terminal, most of us would be looking for the stairs. The nerds among us may eagerly seek out the proverbial programmable elevators, but the average person just wants to push a button to get from one floor to the next, not master gravity-defying vehicles.

Bitcoin addresses have long been a point of confusion for new users introduced to the technology. It’s difficult explaining a bitcoin address through analogy, because none of the comparisons quite match. They’re kind of like email addresses – free to create and unlimited in number – but they’re randomly assigned, and difficult to memorize, more like a phone number. But bitcoin addresses are not always bidirectional like a phone number.

Suppose you receive money from a friend, and later you want to send some money back to him. The address you received funds from initially may belong to your friend or just the bitcoin service he uses. Funds sent to the address may arrive to your friend – assuming he has backed up his wallet – or they may just line the bitcoin service’s pockets, never to be refunded.

A bitcoin address and QR code

Also, the mere receipt of a payment, unlike a phone call or email, rarely helps identify individual payers or explain why the transfer was made, since there are no area codes or analogues to caller ID, nor invoice numbers. The small number of users who investigate the details of bitcoin’s inner workings will come away with a vague impression that sending funds to the same address multiple times (referred to as “address reuse” by the bitcoin community) is somehow dangerous.

This vague impression, linked to poorly understood privacy implications and the seemingly distant threat of cryptographic attacks on reused private keys, may not ward users off from the very real dangers of address reuse.

When it comes to addresses, bitcoin resembles the Internet before DNS. Today, we visit websites through user-friendly domain names like ‘‘, but early Internet adopters directed their computers to connect to other networks by referencing inscrutable-looking IP addresses like ‘’.

IP addresses remain a core part of the protocols that help devices connect, but system designers and engineers have since succeeded in hiding this from users by tying domain names to IP addresses behind the scenes. In doing so, they’ve allowed users to interact with recognizable identities, like the Google search engine.

Promise and pitfalls

As bitcoin services mature and seek to include new audiences, they will also need an address resolution system that ties user-unfriendly bitcoin addresses to the identities of individuals and businesses that users have financial relationships with.

However, as we abstract bitcoin addresses away from the user interface, we must take caution.

The goal is to make it easier for users to pay each other, while dealing with the fundamental technical challenges related to address reuse. Tempting as it may be to build traditional third-party lookup systems, this naive approach will turn into a security and privacy quagmire of personal information disclosure and theft. They would be the kind of high-value databases that blackhat hackers seek out as reconnaissance for subsequent attacks on individuals.

Whenever possible, we must not ask users to give up on expectations of security and privacy in order to gain the software usability they require.

While consumer demands for security and privacy vary, businesses are rarely willing to disclose their income and expense data – which may contain trade secrets – to business partners, competitors or the world at large. Likewise, we should not expect individual users to divulge their income and spending habits to their friends, preferred service providers and unfamiliar analytic companies.

Making this disclosure a prerequisite for bitcoin use would have dire implications for adoption. If it all possible, we should seek easy-to-use payment identifiers that meet business and individual expectations of security and privacy without the inherent pitfalls of trusted third parties.

Author: Amanda Walker

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