I own 3 UTXOs currently
Main stack and 2 addresses that haven’t been consolidated yet….
I like having one big chunk instead of tons of unspent Transactions
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Replies (37)
the tradeoff is worse privacy but you save on fees generally
Why so? Isn't it better to have many smaller UTXOs for privacy?
Ohhhhhhh
Can you explain a lil more about this whenever you get a chance??? 🙏🏾
That’s just what I’m doing now…
But I wanna learn more about the privacy aspect…
Any insight you can share????
Anyone you spend ₿ with sees your stack. Or if you receive it to that address they can follow that stack. They will know when you spend, receive, move funds.
Ohhhhhhhh
if you have a fat stash, single utxo, and you pay someone on-chain with it, they're going to know how much bitcoin you own and will also be able to trace the rest of those funds on-chain
if you split up your funds into many utxos, you limit this to a degree
the tradeoff is that if you have to merge multiple utxos to make a transaction, you're linking them anyway, and have to pay more in on-chain transaction fees
the right balance varies for everyone and is more of an art than a science, because it's tough to know what kind of on-chain transactions you'll have to make in the future
lastly, try to pay with lightning when possible as it affords you great payer privacy - no way for the receiver to snoop on your balances on-chain
It's pretty simple, if you have one large UTXO with 100M sats everyone will be able to see this onchain as soon as you spend from it. If you can obtain many smaller UTXOs you can spend one of the smaller ones and leave all the other ones untouched.
It's basically like paying with a 10000$ dollar bill, much better to spend a 100$ one if you can.
What if anytime you transact,,, just use lightning ⚡️ or ecash?
Just thinking 🤔
on chain fees are almost non existent
today. you don't know what they're going to look like in the future.
you're thinking decades ahead. we will probably die in a stupid war before on chain fees are relevant
Not really. All you have to do is look a few years back. On-chain fees have been really high in the past, to the point at which UTXO management and onboarding onto LN was not immaterial
I remember one time like right after a halving or something when fees got stupid high
Ordinals insanity. It happened around the time we launched our LSP and resulted in significantly higher fees for our services for some time.
It doesn’t cost much to merge UTXOs. Kind of a silly post tbh
Right now it doesn't. What about in a high fee environment?
I’m not the most technical, but if you are using custodial services they of course know your balance and the transactions youre making. But it’s more private than on chain for forward /backwards looking privacy.
I’m sure some of these nerds could explain it way better than I. But I wouldn’t have one large UTXO. I’d rather have many small ones, that way when you are transacting you can pick chunks closer to the amount of your purchase.
The more UTXOs that go in a transaction, the larger the transaction. ie bigger fee. If your UTXO is too small you're just throwing them away on fee.
Bitcoin makes a change address when you send a UTXO that's over the amount you want to pay someone. So you request 1btc, I send a UTXO with 2btc, 1 goes to you, a few sats go to fee and the rest comes back to me in a change address.
There is no point to "trying to get your coins closer the the amount you want to send. You're just making it more expensive to send for yourself for no reason.
No.
This is not a good analogy. You are not affording any privacy, you're just making it more expensive to spend for yourself.
Please explain!!!
I’m trying to learn
There are better ways to have privacy than making your UTXOs smaller.
I know you know that, but for others in the thread reading, swaps with lightning or liquid would be the better way to achieve privacy and not screw yourself on fees.
Why not though? Assuming no mixing of any type, a merchant or any recipient getting paid with a 100M sats UTXO for an amount of 100K sats would learn that I have at least 100M sats.
Maybe you're thinking along different lines?
Sure that's true. But rather than splitting your tx you could instead just pay them with lightning or use boltz to do a swap from your lightning or liquid wallet to pay the merchant on chain from an atomic swap.
Want privacy? Keep a handful of sats on L2.
It's technically better but not really much improvement... It's still all on chain and veiwable. Check out some my other comments in this thread.
there's nuance. you're surrending privacy to the swap operators in most cases here.
Makes sense, I thought we were sticking to onchain only for the purposes of this "debate"! Having your own lightning channels is definitely better in terms of privacy and payment speed
Yes. But I already hold a stack on L2s specifically as a separation of on chain stack and hot wallet spending.
Coin joins are expensive. An atomic swap from my liquid wallet to on chain seems pretty private. Even if they do reveal, they only see my liquid stack and even then they can't see any confidential transactions.
^
And this is why you should have a liquid and lightning stack.
Get some liquid Bitcoin. It may come in handy in a highfee environment. Especially if you need to swap in some liquidity to your lightning node in a high fee environment.
I think ultimately, Bitcoin IS an open network. There is no expectation of privacy. Since that's the case, ANY privacy in Bitcoin is going to have a tradeoff of trust at some level. Whether you have to trust a swap, liquid functionaries or lightning peers. Privacy in Bitcoin requires trust on some level.
Coin joins are probably the most trust minimized but I don't know. I'd have to think on it more.
Or use multiple wallets/addresses which are not connected with each other.
Doesn't matter how maty utxo if all on same wallet. Doesn't matter if it is different wallets on transparent blockchain. They can still see how funds in and out and with what other wallets. If your OPSEC is less than perfect and any of those get connected reasonably to your true name then they, any "they" that cares to look, knows how much YOU have and where you get it and what you do with it.
It's not hard to imagine a scenario where fees spike to eye watering levels.
A nuclear accident in china for example, where people need to move in droves.
Sometimes fees are high, sometimes they're low
joinmarket those utxo
then modest ln channels
then swaps
Some people don’t know history. Even just a decade of history.