A watch only wallet doesn't generate addresses, you simply enter the address you want to monitor. Generally, the idea is that you create a cold wallet off-line and then enter the addresses it generated in a watch only wallet to monitor the balance and transactions.
This is not correct. A deterministic watch-only wallet i.e. a wallet created using a master public key or extended public key can generate unlimited addresses.
Hi everybody.
As far as I understand the idea, the seed is used to generate your private keys. And from private keys you generate public addresses (public keys). So you cannot generate any public key without having private key, yes ?
There is no such thing as a public address. It is just address. From the private key you derive the public key. Hasing the public key gives you the address. Address and public key are not the same either.
It is possible in deterministic wallets to generate address specific public keys using the extended public key. I'm not a crypto ninja so I don't understand the mechanics of this but if you are interested you can read about it here:
https://bitcointalk.org/index.php?topic=19137.0 .
A watch-only wallet can't generate private keys though so it is safe to use it on a computer that may be infected with malware. The only risk is that your privacy will be gone because all your addresses, transactions and balances will be visible to the attacker.