What's the point of new incoming addresses with the Daedalus wallet?

Question

Daedalus seems to create a new set of incoming addresses, is this epoch based, or a privacy measure?

Answer 1

While it's intended to be a privacy-enhancing measure, it's currently somewhat negated by the fact that any Cardano wallet that's currently registered for staking has every address easily linked to the staking address (e.g. see Addresses tab of https://adastat.net/accounts/7e8e16462417aaf4d82249228050eb66b16a143c0433b08de794675f). So you might want to create a separate wallet that's not involved in staking for any intermediate transactions where the new address re-use will actually have the desired effect (not sure if legacy Byron wallets are still create-able anywhere, they would also do the job!).

Answer 2

It's a privacy measure. Daedalus suggests you should only use an address once (although they can be re-used!). There are different addresses such as for Byron and Shelley, however these are rare changes.

All transactions are public, so one can see all transactions sent to an address. If you only use one address, then anyone that knows that address can lookup all the transactions to that address.

Answer 3

All UTxO-based ledgers were conceived as ledgers in which each address must be used just once. Any change left after the transaction should come to a new address. Nonetheless, this does not prevent you from reusing each payment address.

Using the same address multiple times for receiving funds is a privacy issue, however, using the same address multiple times for sending/receiving funds is a security issue (and not only for you).