This is my first post here, so be kind :-|. My understanding of deterministic wallets is that they use an initial seed to create a master key from which you derive multiple receive addresses thus making it harder for others to identify from the blockchain that the funds belong to the same wallet. My question is if you spend a large amount based on multiple UTXO which used different receive addresses, presumably your wallet has to sign the transaction with multiple corresponding private keys. Will this increase the size of your transaction and lead to an increase in the fees you pay?

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You are right that spending multiple UTXOs increases the transaction's size and therefore fee. However, since each UTXO is signed individually, it doesn't matter if they all belong to the same address or different addresses, there is no advantage in address reuse.

What you can do is to consolidate your smaller UTXOs into larger ones during times of low transaction fees, however you do need to be mindful of the privacy implications of that.

  • Understood. I appreciate you taking the time to answer. Commented Nov 28, 2021 at 22:12

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