Clearly, privacy matters. In fact, some might say it matters most in moments like this. But how can groups like “Come Back Alive” maintain their privacy while still allowing potential donors an easy method of providing funds?
BIP47: Payment Codes
Bitcoin Improvement Proposal (BIP) 47 is known as “reusable payment codes for hierarchical deterministic wallets.” It might sound complicated, and it is, but it’s also exceptionally user-friendly once implemented correctly. BIP47 can be broken down into four points:
Payment Code: An extended public key. Think of this as a normal address that you’d send Bitcoin to, as “Come Back Alive” is using on its site, except that when this one is used, it creates a “notification address. This is ultimately a decoy address.Notification Address: this is found by using a “notification transaction,” which happens when a doner interacts with the payment code, or address mentioned above. This transaction happens when a doner sends bitcoin to the address (payment code). A secret is derived from this transaction which leads users to a “designated input.”Designated Input: This is the first input of the “notification transaction.” This reveals the “designated public key” being used in the transaction in which the outputs are being sent.Designated Public Key: This is the actual address for which the coins will be spent.
To summarize, a payment code is a decoy address that allows every individual transaction to never re-use the same wallet address, allowing privacy for the reception of funds and privacy for donor identity.
The Power Of BTCPay Server
Considering that the goal of groups aiding Ukrainian forces is to accept large amounts of donations from givers across the world, the idea of creating a new public address manually, even by the day or week, can seem egregiously burdensome for groups like “Come Back Alive.”
Another option is utilizing a BTCPay server which is an open-source and self-hosted payment processor for Bitcoin. A service like BTCPay allows its users to automate the creation of new addresses for each transaction, though it does require a bit of a self-starter attitude.
How does BTCPay offer heightened levels of privacy?
BTCPay Server’s description of its privacy assurances. Source .
According to the BTCPay website :
“Re-using an address for receiving payments is a privacy issue. Providing a different address manually to each customer is not an optimal solution. Imagine having to send a unique email to everyone that wants to pay you with cryptocurrency.
BTCPay solves the address reuse issue. It automates the checkout process for the merchant by creating a new invoice with a unique address created from the merchant’s wallet, each time a customer pays using BTCPay.”
While the fact that BTCPay is self hosted means that a certain amount of technical know-how is required to use it, getting past the setup allows for easier, automated maintenance. Organizations like the ones currently supporting the Ukrainian military, could benefit greatly by setting up BTCPay Server, which would utilize the same methods as outlined in BIP47, allowing a single-use address perception to be associated with the identity of the group, while providing donation transactions with a greater level of privacy.
Using Bitcoin Privately Is Central To Its Potential
Privacy is existential to Bitcoin. Groups like “Come Back Alive” represent decentralized communities organizing around a shared goal — in this case, their belief in resistance to nation-state rule. It is imperative that, when opportunities arise to truly provide an opt-out financial system, the Bitcoin community rally behind that cause and do the due diligence of privacy education.
Methods like BIP47, its automation through services like BTCPay, as well as future improved implementations of it, will all be necessary for the preservation of privacy and security at scale.
