Topic: Wallet Confusion (Read 655 times)

Or more specifically a web based hybrid wallet.

Pure web wallets (such as coinbase, localbitcoins, and bitstamp) do not provide you exclusive access to your private keys.

Hybrid wallets (as long as they haven't been maliciously modified) don't have access to your private keys in decrypted form, don't have access to your passphrase, and provide you with a backup of the wallet so you can access it even if the website disappears.


More specifically, the private key is the thing that the wallet software needs to spend the bitcoins.  As long as you have a good backup of the file that the wallet uses to store the private keys, and you know the passphrase that is used to decrypt the contents of the file, you don't ever need to actually know what the private keys are.  Furthermore, even if you do know what the private keys are, you'll find it VERY DIFFICULT to create and broadcast a transaction without providing those private keys to some sort of wallet software that you'll use to generate the transaction.


Technically, the address is a hash of the public key.  Even more specifically, it is a hash of a hash with a version and a checksum.

Yes.  You can choose to use additional wallets if you want.  I generally advise using 3 wallets if you have an amount of bitcoins that you feel is significant.


A private key is used by the wallet software to sign transactions to prove that you have the right to spend the bitcoins.

A public key is calculated from the private key. This is a one-way calculation.  There is no known feasible way to calculate a private key if you only know the public key. The public key is used to verify that the signature on a transaction is valid.

A bitcoin address is a hash of a public key.  This is another one-way calculation.  There is no known feasible way to calculate a public key if you only know the bitcoin address. Using a bitcoin address reduces the amount of information that you have to give someone to send you bitcoins (a 160 bit hash instead of a 256 bit public key). It also adds an additional layer of protection since there are multiple one-way calculations between the private key and the bitcoin address.


You never have your bitcoins.  Bitcoins don't actually exist.  The term "bitcoins" is an abstraction that we humans use to make it easier to discuss the concept of the transfer of value.

What actually exists is a transaction ledger called a "blockchain".  This transaction ledger encumbers an amount of value with a requirement that a signature from a particular private key be provided to re-encumber that value with a new requirement.

When you "send bitcoins", what you actually do is provide the digital signature that proves that you have the right to re-encumber some amount of value.  Then you encumber that value with a new requirement of a digital signature that someone (the recipient) else is able to provide.

To make sure that you can transfer value from your control to someone else's control, you have to make sure that you have all the necessary private keys to generate the proper signatures.  Your wallet software uses these private keys to generate the signature for you.  Most wallet software stores these private keys for you, but you should have a good backup just in case something happens to the copy that the wallet is using.


Since software handles the storage, and security of the private keys, it is generally not necessary for an individual to know what their private keys are.  If you actually want to know your private keys, then yes you'll need to get them from the wallet.

It is never necessary to know the public key.

You'll also get the bitcoin addresses that are associated with the private keys from the wallet.

Use a bitcoin wallet.

Some options depending on what you plan to do with the bitcoins are:

• Paper wallet
• Armory
• Bitcoin Core
• Electrum
• MultiBit
• blockchain.info/wallet
• Mycellium
• Android Bitcoin Wallet

Oh, sorry.  I thought you said you wanted to "keep this really simple".

What you are describing is called a "paper wallet".  It is good for long term storage of bitcoins that you won't be spending at all, but tends to be a very inconvenient way to store bitcoins that you plan to actually use any time soon.  If you do this, you should create a new paper wallet with a new set of private keys and addresses (and send the entire balance to the new addresses) every time you import any of the private kesy to spend any of the bitcoins.


At the bare minimum, a wallet is a set of private keys and the public bitcoin address associated with each private key.  More generally, wallet software provides tools to:

• Keep track of the value that the wallet has access to
• Create backups to protect access to the value
• Create bitcoin transactions to transfer that value to other addresses (such as to make a payment)
• Encrypt the private keys with a password to protect access to the value
• Generate new private keys and the associated bitcoin addresses

Blockchain stores an encrypted copy of private keys for you.  They provide the tools to create backups, create transactions, keep track of the value, encrypt the private keys with a password, and generate new private keys (and the associated bitcoin addresses).  So, yes, in doing this you have set up a wallet.

Unless you have created a backup of your blockchain.info wallet, you have to get your encrypted private keys from them.  This means you will lose access to your bitcoins if they ever disappear.  As such, it would be a good idea to get a backup as soon as possible.

The identifier tells blockchain.info which set of encrypted private keys are yours, so they know which ones to send to you.  If you lose this identifier it can be difficult (impossible?) to determine which set of keys are yours, and therefore difficult (impossible?) for you to recover your wallet from them if you don't have a backup.

The address (or addresses) are used to receive bitcoins at that wallet.  You give these out to anyone that will be sending bitcoins to you.  As long as you have the private keys (from your backup, or from the blockchain.info identifier) you can always recalculate the bitcoin address.

The passphrase is used to encrypt the private keys before sending them for blockchain.info to store.  Blockchain.info does not have this passphrase.  If you forget the passphrase it will be impossible to access the wallet.  There is no way for blockchain.info to recover or reset the passphrase for you. If you don't know the passphrase, then the bitcoins are permanently unspendable.  The backup is also encrypted with the passphrase, so it won't help you recover access to the bitcoins without the passphrase. Note, anyone with the passphrase can access your wallet and steal your bitcoins.


When you log into the coinbase website, they should provide you with the tools necessary to send bitcoins to addresses.  You would use the address from your wallet and tell coinbase how much bitcoins you want to send.  They would then take care of sending the bitcoins from your coinbase account to your bitcoin wallet.


Your private keys are encrypted with your passphrase before they are sent to blockchain.info.  Your passphrase is not sent to blockchain.info.  This means that they cannot spend (steal) your bitcoins and that they cannot recover access to your bitcoins if you forget (lose) your passphrase.


To be a functional wallet, the software needs access to private keys.  The identifier is used to get the encrypted private keys from blockchain.info.  The passphrase is used to decrypt those private keys so that you can use them to sign the transactions that you send.  The wallet software handles these details for you as long as you know your identifier and passphrase.  To receive bitcoins you need to give your bitcoin address to the person that is sending them to you.


With blockchain.info, you have already done this.  If you prefer, you can look into some of the other wallets I listed earlier.


This depends a lot on which wallet program you use.  For the sake of increased security and privacy, some wallets generate a new bitcoin address for EVERY transaction. Since every bitcoin address has a different private key, it would get to be burdensome to access, write down, and keep track of the ever growing list of potential private keys.  Most well written wallet programs store these private keys in a file that you can backup so that you can recover it without having to type in dozens (or hundreds!) of private keys.

In the case of the current behavior of blockchain.info wallets, they generally re-use the same bitcoin address over and over.  This results in slightly (VERY SLIGHTLY) less security, and a reduction of privacy.  As long as you write down and never lose the private key of each address that you generate in the blockchain.info wallet, that list of private keys would be a valid backup.


If you generate a new address (some wallets do this automatically without telling you whenever you spend less than your total balance) and receive bitcoins at that address (some wallets will do this with the change from a transaction when you spend bitcoins), and then the wallet disappears before you can write down the private key (for example if blockchain.info disappears, or a local wallet such as Bitcoin Core crashes), then you won't have access to spend those bitcoins that you just received at that new address.

A backup is just a way to make sure that you maintain access to the necessary private keys without needing to write them down every time.


Whatever program/website you are using for your wallet. In your case, it sounds like you've chosen to use blockchain.info/wallet.


Your wallet program will add up all the bitcoin transaction outputs that you have access to spend and will display the sum to you as a total balance.  In your case, it sounds like you've chosen to use blockchain.info/wallet for this.

Blockchain is a web wallet, and you might also call it your client.

Address = Thing people need to send bitcoins to you,
Private Key = Thing you need to spend bitcoins (Keep this secret)

And you can export the private key. The public key is technically just the address.

And also, computer failure, lost passwords, and file corruption can lead to the loss of your keys, so you should back them up.

I've only used block chain. Info and coin base.   Is block chain my client?

What is the difference between address and keys?

What client should I use so I always have my bitcoins and the client is only doing the transaction nothing else?

Do I get my private key and public key from this client?   

Yes. Just not easy. I'll explain further down.


A wallet contains 1 or more public/private bitcoin keys.


Ok. Let me try to explain.

A bitcoin private key is just a number. In fact it's 256bits. Usually a random number. Go to brainwallet.org and click the random button (RHS) you will see a 256bit random number in hex. You will also see the bitcoin key that goes with it. You could write these both down if you wanted to.

If you then want to send any BTC on that address, you can load up brainwallet with the private key, and it has menu option Transactions that will allow you to make a payment.

Optionally....

Just open a https://www.strongcoin.com account. It's easier.

First off which client are you using? If you're using Qt it will generate new private keys every 100 transactions (as it follows the original suggestion of only using an address once).

As the address is derived from the private key all you need to do is know the private key for a corresponding address. You do not need to back up both - all clients will be able to calulcate it.

A wallet is simply a 'list' of private keys which are used to sign transactions that relate to the movement of Bitcoins from addresses that are 'linked' to the private key.

I personally would not keep many Bitcoins in Blockchain - if you do make sure to use 2FA.

If you have you're keys written down there is always the chance that they get burned down in a fire with your computer. People have as many secured backup as possible to ensure that if anything goes wrong they still have the private keys.

All clients are capable of sending Bitcoins - to check your balance simply open your client, usually the GUI is good enough to show you outright.

Sorry but even after reading plenty I am still confused.

To keep this really simple I want to know how to have complete and total control of my bitcoins, no exhanges or mining software.  I’d prefer just to write down my public and private address and that’s it if possible.

I guess my first question is what really is a wallet?  Is it the private and public address combination?

So far I went to blockchain.info and got:
Identifier
Address

I thought this was getting a wallet setup  I am not sure why I did this now.

Then I went to coinbase and got a bitcoin.  I need to get this bitcoin in my wallet somehow on Friday.


Someone said in another thread that blockchain doesn’t have access to my wallet.   What did I get the identifier and address for, I thought the address is the wallet?  How do I simply get a wallet so I can move money by myself and then only have to worry about the public and private address?

Also, someone said you need to ‘backup’ your wallet.  If I have my keys written down and I never lose them why do I need to back anything up.  It seems as though when I spent bitcoins they are gone from my wallet and when I receive them I get more….why do I need to back anything up?

If I keep my bitcoins in my wallet and do not use exchanges what program/website do I go to when I need to send money to someone?  Or how do you check your balance?