Bitcoin public payments are no longer exposed! How does Silent Payments achieve convenience and privacy protection?

In an increasingly digital age, privacy issues that arise will become a major challenge to solve. Taking financial flows as an example, suppose someone publicly shares the same receiving address over a long period (for example, a donation link on social media). Anyone can easily track all fund flows to that address, which completely destroys the user’s financial privacy. To maintain privacy, the traditional approach is to generate a new address for each transaction. However, in practical applications like accepting fixed donations or e-commerce payments, this method is extremely inconvenient. Silent Payments solve this problem by allowing a public address to be reused without compromising privacy.

Early Attempts: From Stealth Addresses to BIP 47

Before Silent Payments appeared, developers proposed various solutions to address the privacy issues of static addresses, including the well-known Stealth Addresses (born in 2012) and BIP 47 (PayNyms).

The concept of early stealth addresses was very straightforward: they allow the recipient to generate a unique and private address, ensuring that only the recipient can access the funds through cryptographic techniques. However, to operate the system, additional data (OP_RETURN) must be attached to transactions on the blockchain. This not only increases transaction size but also makes these transactions conspicuous on-chain, losing anonymity.

Later, BIP 47 (also known as PayNyms) improved on this. It allows users to publish a permanent “code,” and both parties can establish a payment channel through this code. However, BIP 47 has a clear drawback: before starting a transaction, both parties must perform a “notification transaction” to establish the connection. This not only incurs extra fees but also leaves traces on the blockchain, making the user experience less intuitive and more costly.

( Stealth Address ( What Are They? Unveiling the Mysteries of Blockchain Privacy Weapons )

What is Silent Payments?

Silent Payments gained attention through proposal BIP 352. It perfectly solves the above pain points: allowing users to publicly share a static address, but each time they receive Bitcoin, the funds are directed into a new on-chain address that is not publicly linked to the static address.

This means you can confidently put the Silent Payments address on your Twitter bio or personal website. The outside world can only see this static address, but when someone transfers funds to you, the blockchain only shows a normal transaction, and no one can link this transaction to your static address.

How do Silent Payments work on Bitcoin?

Silent Payments mainly eliminate the need for interaction between sender and receiver, making the process as simple as scanning a QR code.

The sender only needs to scan the Silent Payments code (QR code) provided by the receiver. The wallet will then use the “sender’s private key” and the “receiver’s public key” to perform cryptographic calculations to derive a shared secret. Using this shared secret, the wallet generates a brand-new, one-time Bitcoin address. When funds are sent to this new address, on-chain it appears as a normal Taproot transaction, with no indication of any connection to the receiver.

For the receiver, Silent Payments require the wallet to do more work. Since the address is generated randomly, the receiver does not know which address the funds will go to. Therefore, the wallet must continuously scan each new Taproot transaction on the blockchain, and use the “scan private key (Scan Key)” to attempt to match each transaction. If the calculation matches, it indicates that the funds belong to you; once confirmed, the wallet can use the “spend private key (Spend Key)” to access these funds.

In simple terms, the sender is responsible for “hiding” the funds, while the receiver is responsible for “identifying” their own funds amidst the vast sea of transactions.

Label (Tags) Technology to Distinguish Fund Sources

Since Silent Payments advocates using a single static address, a challenge arises: how to identify the source of payments. To address this, the protocol introduces a “Labels” mechanism, which is a technique to differentiate fund sources by deterministically fine-tuning the spending key without sacrificing privacy.

For example, creators can generate two silent addresses with different labels, placed on platforms like X (Twitter) and Nostr. Although these addresses belong to the same wallet, they differ slightly in code due to label fine-tuning. When receiving payments, users can clearly identify which social platform the funds came from in their wallet backend. However, on-chain, these transactions still have no relation to your real identity, allowing users to enjoy the convenience of a single wallet while flexibly managing fund flows across different channels.

Current Support: Wallets and Exchanges

Although Silent Payments is a promising technology, it is still in the early adoption stage, mainly due to the high computational demand for wallets to scan on-chain transactions.

Some pioneering wallets are already supporting or developing this feature:

Cake Wallet: A well-known multi-currency wallet that has supported Silent Payments.

Silentium: A wallet application specifically designed for Silent Payments.

BlueWallet: It is also reportedly researching integration of this feature.

For exchanges, supporting Silent Payments would be a significant boon, greatly reducing users’ privacy concerns when withdrawing funds. As the technology matures, we are likely to see more mainstream hardware wallets (like Trezor, Ledger) and software wallets supporting this feature. This technology allows Bitcoin to maintain transparency while providing a digital privacy experience similar to cash.

This article Bitcoin Public Receipts Are No Longer Naked! How Silent Payments Achieve Convenience and Privacy Protection first appeared on Chain News ABMedia.