Bitcoin Forum

Does the wallet.dat need to be backed up after each transaction? Its not clear. I've back it up plenty of times and was just wondering if it was necessary after each new BTC received. I'm guessing yes but wanted to make sure.

I want to see the answers to this because I am so confused about the wallet! I just encrypted my wallet.dat, I think, using truecrypt. That is, I encrypted a BACKUP of wallet.dat. But the original wallet.dat is sitting there on my drive unencrypted and seemingly vulnerable as hell! I still don't get how to have a long-term, deep storage wallet and another spending money wallet.

Any help with this stuff would be most appreciated. Might even get a tip!

Each wallet already contains 100 "future" keys that aren't used yet, but will be for new transactions. If you have a backup and did at most 100 transactions (sent) since then, you should be fine.

Question 1: Why should I generate new addresses?

You don't have to, but it's just default policy to use a new address for every transaction.

Bitcoin will eventually encrypt wallet.dat, but it does not yet do that.

To have a secure "savings account" wallet, I would suggest installing Bitcoin inside a VirtualBox VM. That way any viruses on the host computer can't access the wallet. You only need to boot up the VM when you want to spend coins, you can receive them while Bitcoin isn't running, and check the balance on blockexplorer.com.

No, because the client automaticly generates 100 keypairs for future use upon first boot.  It will use a new keypair with each send by default, and everytime that you hit the 'new address' button.  Those keypairs (and addresses) are good forever, so as long as you back up at least as often as once every 100 transactions you will be okay.
You can also tell it to make a lot more for you by starting it with
 the -keypool=somenumber switch.

The practical reason is that it helps you know where the bitcoins came from. If you give each person you deal with a different address you know who sent the bitcoins by which address received them. The paranoid reason is that by using a different address each time it makes it harder to tell which transactions came or went from a single person.

You must backup again when the number of times you have sent coins + the number of new addresses you have created is 100 higher than the last time you backed up. For safety you should do so at 50 or earlier. If you want to be paranoid about wallet backups you should back up every time you make a new address or send bitcoins. Receiving bitcoins does not require a new backup.

The wallet stores proof of ownership of an address rather than the bitcoins. The bitcoins are stored on every computer with a copy of the block chain but your wallet is what allows you to spend yours.

The reason you may need a new backup after sending coins is that one or more group of coins you have received is sent with part going to the address you sent them to and the rest going back to you at a new address. If that new address is not in your old backup you will lose those bitcoins.

Using a different address can improve your anonimity, but if you would rather just give a different address to each person that you transact with, those addresses are still good forever.  So you don't have to tell a new address to your friends just because you changed the address that the client displays.

Question 2: Why does the client create a new address every time I receive coins?

It doesn't.  It creates a new address every time you send coins, or ask it to do so.

I'm pretty sure when I send coins from Mt Gox to my account the string in "Your Bitcoin address:" changes. You don't think so?

MtGox is not your wallet.  It's a website.

I think there is a bug that this isn't the case? I think you have to receive or send something first then wait a while...I think?

No, I'm saying the "Your bitcoin address:" in my local client. The address changes each time I receive coins from Mt Gox.

I think it only changes the first time you receive coins at a new address and only if the address that received the coins is still the one displayed. This is to encourage you to use a new address for each transaction. This improves both your ability to track where your bitcoins came from and also your privacy.

Ah, must be a new thing.  I've never noticed my older client changing the address without me explicitly telling it to do so.

I'm running 0.3.21-beta

It does so because it's recommended to use a new adress for every transaction. Your old adresses are still valid though.

Yes, but why?

Question 3: Why are we advised to turn off the bitcoin client before copying wallet.dat?

Main reason is privacy.

If you only use one adress and that adress is somehow linked to your person, then every single transaction you ever made would be public. If an adress is compromised now, only a fraction of your activity will be known.

Because otherwise it's possible that the client is writing to it as you're backing up. You can also backup using the RPC interface if you run it using -server.

Sorry, you lost me there.

Another wallet question!:

If I want to create a wallet with one, single, unique bitcoin address to be used for long-term, deep-storage HOW do I do it? (Is this where I load bitcoin client onto a fresh computer and note the address given in "Your bitcoin address:"?) What then?

Then you can send money there. You only have to get the wallet online when you want to spend money from that wallet.

Bullshit. That will protect your viruses against Bitcoin, not the other way around.

Fuck you. Hey look, I can be a potty mouth too! Put a TrueCrypt drive inside the VM and I'd like to see the virus that gets at the wallet.dat...

Then it's only protected while the machine is not running. There is no advantage over a encrypted wallet file without VM.