What is an XPUB and when does it make sense to use it?
If you want to buy Bitcoin with Bittr, with most Wallets you’ll come to the point, where you have to select between a single Bitcoin address or an XPUB.
Why is this so important and what’s up with that? Let’s break it down:
The Basics of an XPUB
An XPUB, or Extended Public Key, is essentially a master key that allows you to generate multiple Bitcoin addresses from a single source. This concept is part of a broader system called Hierarchical Deterministic Wallets, introduced through Bitcoin Improvement Proposal 32 (BIP 32).
XPUBs are so useful, because with an XPUB it’s possible to do address rotation, which basically means that you can receive sats to the same wallet but to different addresses. This is crucial for maintaining privacy and security, as reusing the same address for multiple transactions can reveal too much information about your finances to everyone who knows your address.
An XPUB can be thought of as a ‘parent’ key from which multiple ‘child’ public keys can be derived. In simple terms, it’s like having a master blueprint that can generate all the addresses you need without exposing the underlying private keys that control your Bitcoin. This makes XPUBs incredibly powerful for managing your Bitcoin addresses in a secure and organized way.
XPUBs and Privacy
The ability to generate and manage multiple addresses from a single XPUB comes with some privacy implications. Because an XPUB can generate all your Bitcoin receiving addresses, anyone with access to your XPUB can see all the addresses and transactions associated with it. This essentially gives them a ‘watch-only’ view into your wallet, meaning they can monitor your incoming transactions without being able to spend any of your Bitcoin.
For this reason, it’s important to handle your XPUB with care. Only share it with trusted services or individuals, and be aware of the privacy trade-offs involved.
Why XPUBs are great for automated savings
As a service that helps you buy Bitcoin securely and on a recurring basis, we benefit greatly from XPUBs. By connecting your XPUB to Bittr, you allow us to generate new addresses on your behalf for each transaction. This helps to prevent address reuse and keeps your Bitcoin transactions private.
For instance, with an XPUB, Bittr can automate withdrawals directly into your wallet, using a different address each time. This setup simplifies your experience and it stays true to the best practices of Bitcoin’s privacy ethos.
❗️When you share your XPUB with Bittr, we still know all of your Bitcoin transactions linked to this XPUB. The benefit is: Someone else, who knows only one of your Bitcoin addresses (for example when you spend Bitcoin) doesn’t see your whole balance.
Conclusion
XPUBs are a cornerstone of managing Bitcoin addresses effectively and securely. They allow you to keep track of your addresses, enhance your privacy, and make the process of receiving Bitcoin easy.
TLDR
If you want to buy Bitcoin from Bittr and receive it to a new address for each purchase - choose the XPUB.
🟢 Great for privacy
🔴 You need to be careful not to share the same XPUB with anyone else (This would ruin the gained privacy)
If you want Bittr to send your Bitcoin to the same address for each purchase - use the single address.
🟢 Easier setup, less to take care of
🔴 Bad for Privacy
💡Tip: Never share an XPUB with more than one entity, since it reveals the whole balance on that (wallet) account.
We care about your privacy and recommend using a fresh XPUB when transacting with Bittr: Please generate a new XPUB by creating a new account in your wallet, which will use a new derivation path. This account can be within a wallet you already use.
