.Type-2 Hierarchical Deterministic Wallet: A Tree of Keys Generated from a Seed
image::images/HD_wallet.png["HD wallet"]
==== Advanced Keys and Addresses
===== Encrypted Private Keys (BIP0038)
@ -520,13 +518,17 @@ Vanity addresses can be used to enhance _and_ to defeat security measures, they
He could advertise a randomly generated address (e.g. 1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy) to which people to send their donations. Or, Eugenio could generate a vanity address that starts with 1Kids, to make it more distinctive.
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 their own address, thereby diverting donations to themselves. 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. In the case of a random address like "1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy", the average user will inspect the first few characters "1J7mdg" perhaps and be satisfied that the address matches. So does a vanity address increase security? If Eugenio generates the vanity address "1Kids33q44erFfpeXrmDSz7zEqG2FesZEN"
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 their own address, thereby diverting donations to themselves. 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. In the case of a random address like "1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy", the average user will inspect the first few characters "1J7mdg" perhaps and be satisfied that the address matches. 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:
==== Key Storage
===== Software Wallets
.Generating vanity addresses to match a random address
|=======
| Original Random Address | 1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy
| Vanity (4 character match) | 1J7md1QqU4LpctBetHS2ZoyLV5d6dShhEy
| Vanity (4 character match) | 1J7mdi84uzJTDHhi56Xj8UuCWXPydTxAKc
|
|=======
===== Hardware Wallets
So does a vanity address increase security? If Eugenio generates the vanity address "1Kids33q44erFfpeXrmDSz7zEqG2FesZEN",
users are likely to look at the vanity pattern word _and a few characters beyond_, for example noticing the "1Kids33" part of the address. That would force an attacker to generate a vanity address matching at least 6 characters, expending an effort that is 3,364 times (58 x 58) higher than the effort Eugenio expended for a 4 character vanity. Essentially, the effort Eugenio expends (or pays a vanity pool for) "pushes" the attacker into having to produce a longer pattern vanity. If Eugenio 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.
Andreas M. Antonopoulos
10 years ago