This is the kind of question I envisioned for this territory, so I might as well ask it. I know it improves privacy, but can someone elaborate on that? Also, any other benefits?
Privacy benefits are (not limited to): when you want to check on transactions from/to your wallet, you are looking them up in your own node, and not leaking your IP address to public services like mempool.space. Let’s say you are waiting for a transaction to complete, by checking the transaction ID or by checking the receiving address. If you do this on mempool.space, you’ve created a correlation between that TXID or address and your IP address. Do this multiple times and a large inventory of correlations can be created. Instead, if you do this on your own node, you are only leaking your IP to yourself, so no/less risk.
There’s also the benefit of validating transactions and/or confirmations from a node you trust instead of a public service which could in theory be supplying fake information. Of course, this is only valuable if you trust your own node, and you trust the supply chain for how you got your node setup.
There’s probably more, but that’s what comes to mind
Thanks. This is the kind of information I was looking for. I used the term "connect" because that was term used when I was playing around with my wallet software this morning, and one of the options was to connect a wallet. I wondered exactly what that meant.
No you can run a node in your house and connect to it locally and scan for all the information you need to find balances and create and send transactions. Tor has nothing to do with it.
You can’t use a hardware wallet without a node. Unless you are using your own, you are using someone else’s node which means not only exposing your privacy but also deferring to someone else’s rules of the network.
Correct. And the watch only app is connected to someone’s node to get balance info and to get the information needed to create transactions for the hww to sign.
If you don't connect it to your own node, it means you are connecting to their node and they can see your balances and IP address. It's terrible for privacy.
I think your question is missing something: "connect" you mean to use a HW for a LN node funding source or just a "cold" wallet using a full node to broadcast a tx made with it?
I wasn't referring to LN use at all. I always considered it bad security practice for my node to be attached to a cold wallet, nor do I see a purpose. Yesterday while messing around with a cold wallet's settings I saw the option "connect to your node", and wondered why anyone would do that. I figured I would make it a question as a learning opportunity. I liked your prior answer.
It seems unnecessary to me as a funding source for my lightning node. I would just fund my node through a hot wallet in that case.
I would just fund my node through a hot wallet in that case.
Yes that would be the "cache level" from my guide. With a medium amount of sats, only enough for your needs.
I see many users using all their stash in one place and doing from there all sort of things. Wrong. Dispersing the stash is the best method, also a protection anti-theft (see this recent story)
Staying humble is an important aspect.
One guy told in a group chat that in Sweden, thieves go to meetups to see who to rob and then go to their houses and try to steal the bitcoins.
It is very important to have in place some plausible deniability methods, playing dumb if you are threaten with a wrench or something.
For me personally is simple: I will never give up the access to my stash, no matter what. And thieves knows that if you die, they will get nothing, so will always try to intimidate you. Always stand your ground.
Using decoy wallets is a good method. Also the covenants or time_lock option could be a good protection. You can setup a wallet that the funds cannot be moved to any other address only to a specific one. so if the thief is trying to move them, will have a nice surprise, funds are coming back to you (another wallet set).
Running your own node not only contributes to upholding Bitcoin's consensus rules, thereby enhancing the integrity of the Bitcoin network, but also empowers you to actively support or reject proposed forks. These forks represent changes in Bitcoin’s consensus rules, and by running a node, you can choose to enforce either the new, modified consensus rules or adhere to the existing ones.
Every time you engage in a bitcoin transaction, your wallet software requests transaction information, encompassing details such as transaction history, inputs, outputs, and confirmations, either from your local node or from remote nodes.
Running your own node enables seamless integration of the node into your wallet software, empowering you to independently query, transmit, and verify transaction information directly relevant to your wallet. Utilizing your node in this manner ensures both the privacy and integrity of your transactions, as it conducts transaction verification locally, adhering strictly to its own ruleset, and thereby ensuring that transactions are validated accurately and securely without disclosing sensitive data to external entities.
On the contrary, querying remote nodes poses security risks, as these sources may be compromised, leading to potential manipulation of transaction data or dissemination of inaccurate information.
Additionally, it compromises privacy, as the servers and nodes of third-party services can access your IP address, query history, and therefore, your account balances and spending activity.
Moreover, any personal information provided to establish the service, such as email address, phone number, or physical address, can be linked to your transactions and account balances, further compromising your privacy.
Running your own node empowers you to combine it with a locally-hosted block explorer, allowing you to have full control over querying and analyzing blockchain data directly from your own node, enhancing your privacy, control, reliability, and security.
On the contrary, relying on third-party block explorers poses several risks that can compromise your privacy, security, and the accuracy of the information you receive.
Third-party block explorers often collect and store users' browsing habits and transaction data, including IP addresses, query history, and other user information, potentially compromising users' anonymity and privacy.
Moreover, trusting third-party services to handle your data securely leaves you vulnerable to potential security breaches. If the service is compromised, your sensitive information could be exposed to malicious actors, posing a significant security risk.
Additionally, third-party block explorers may present data in a biased or manipulated manner, potentially leading to misinformation or confusion among users.
Excerpt from one of my write-ups, maybe it'll be of use, maybe not. 🙂💕
If you don’t have port 8333 open you can still download the blockchain and verify transactions to preserve privacy. If you don’t have 8333 open you will not help the network by sending blocks and transactions and other messages to others on the network. What router do you have? It’s kind of annoying to open ports if you have a cheap router a lot of the isp’s give out.
Why? The node is better to be used as a node to manage your transactions, not as a wallet. I would have cold wallets separated and very very cold ;) but maybe I am missing something
You can use your extended public key from your hardware wallet to verify your transactions with your full node while still keeping your private key private and offline in your hardware wallet. It’s important to note that if you are using a hardware wallet you are using somebody’s node to verify the transactions so it’s much better practice to use your own.
Incentives for Running Your Own Full / Pruned Node
Enabling Personal Enforcement of Bitcoin's Consensus Rules and Forks:
Enhanced Privacy and Security of Personal and Transaction Data:
Enabling Utilization of A Locally-Hosted Block Explorer: