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Is it safe to use Bitcoin over Tor?


#1

This question is aimed mainly at exit nodes.

  1. Is it safe to use web wallets (with https://)?
  2. Is it safe to use desktop applications (Electrum)?

#2

Hi @HappyBubble

Do you mean “safe” anonymity wise or “safe” from being stolen?

https://whonix.org/wiki/Money


#3

My question was aimed towards exit nodes:

Is it safe to use web wallets (with https://)? (can exit nod for example change address, where I’m sending BTC, can it steal my login information?)
Is it safe to use desktop applications (Electrum)? (can exit nod change for example address, where I’m sending BTC, can it steal my login information?)


I’m not aware of any anonymity risks.

All traffic (browser, desktop wallet) is going through Tor on Whonix. And even if my IP somehow leaked, I’m not aware, that transactions would store IP of sender in blockchain.


As blockchain can be view publicly, I’m aware, that it’s possible link transactions between BTC addresses. This chain of evidence can be broken by exchanging BTC to Monero (not sure thou, never tried it).


#4

Man-in-the-middle Attacks

Paper by Alex Biryukov, Ivan Pustogarov ( Cornell University )

https://arxiv.org/abs/1410.6079

Note: I added the above link to show that there are anonymity concerns you should be aware of when using Bitcoin. I am not implying that “Using bitcoin over Tor is a bad idea” as the title states.

Regrettably I am not able to answer your more specific questions. This will have to be done by someone more experienced than myself.

I would also like to suggest another great resource for Tor related questions:

https://tor.stackexchange.com/


#5

While I don’t know the odds of your bitcoins being taken away while using a software wallet like Electrum (probably very low), I have come to the conclusion after some reading and testing that the safest way to use bitcoins I know of is to store your bitcoins on a “cold wallet”, which is never connected to the Internet. This ensures that your private keys can never be taken away from you.

In broad terms, this would imply the following setting:

  1. Create an Electrum wallet on a machine with no access to the Internet (virtual or physical machine). You will have a seed and the first generated addresses, but won’t be able to see your balance and directly spend your bitcoins with it.
  2. Send your bitcoins on this new wallet for safe storage.
  3. Create a “watch only” Electrum wallet version of this cold wallet on a machine connected to the Internet (for instance a Whonix-Workstation machine) using the master public key of the cold wallet.
  4. Bitcoins are sent through the watch only wallet, but only after being signed by the cold wallet. The private keys never leave your cold wallet and can never be accessed through the Internet as long as the cold wallet is not connected to the Internet.

For a detailed description of this setting, refer to this official Electrum documentation:

http://docs.electrum.org/en/latest/coldstorage.html


#6

It is no way safe as there is a risk of man in middle attack.

Bhawani
Writer & Blogger at HostStud


#7

Not if you use a watch only wallet and sign the transaction on another offline wallet which contains the private keys