Quote from: ben-abuya on June 24, 2011, 10:46:00 PM

The only reason I can think of that you wouldn't want an untrusted client preparing the unsigned transaction for you is that you don't want to divulge any of your public keys that are holding money. But that means that if you receive money away from your trusted machine, you won't be able to spend that money. I think a combination makes sense. You can download a cache of your current transactions at home. When on the road, if these transactions can cover the bill, you don't need to divulge any public keys. Otherwise you have the choice of divulging public keys to the client to check for new incoming transactions until you can cover the bill.

I don't think this is correct.

You have the following 4 items: the private key (A), the public key (B), its associated hash (C) and finally the associated bitcoin address (D), which is base58encode( hash (C) + checksum). (D) is only invented so that the hash (C) is human friendly.
If you know (C), you can calculate (D) and vice-versa. But is it not possible to calculate the public key (B) from (C) or (D).
Initially to receive coins, you reveal your bitcoin address (D).
If you send coins to it, a standard transaction is made to (C) (Humans do not really need to read the raw blockchain). Output from it can be claimed if you can sign the transaction.

So up to the point where you only receive coins, you never have to reveal your public key (B).

But if you want to spend any of them, you will have to reveal your public key to everybody. Otherwise is it not possible for anyone to check to see if your signature is correct.
That is why 2 checks are made when you claim a transaction: first the supplied public key is checked that it hashes to (C) (so that you cannot claim the coins using another public key), and afterwards the signature is checked using the supplied public key.

In fact, revealing your public key shouldn't make things more insecure. But it was probably added as an extra security layer: once you have to reveal the public key (=to spend some coins), you can spend all coins of that bitcoin address and send the change to a new bitcoin address with unrevealed public key. To get to your bitcoins, one must first find a public key that hashes to your bitcoin address (quite impossible already) and then use that to find the associated private key (again at the moment quite impossible).