Wallets : backup, security and change

[DannyHamilton]

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if you put all your btc on the address of a paperwallet and then you spend a part of them, that paperwallet will become empty. And then if you later try to use that paperwallet... surprise!

A paper wallet is generally an advanced function.  You really shouldn't be using a paper wallet if you don't understand what you are doing.  The paper wallet only "becomes empty" if you happen to use a client (or create a transaction) that sends change to a new address (rather than re-using the existing one), and if all the BTC associated with the paper wallet address were received in a single transaction.

If the BTC were received in multiple transactions, then it is likely that some of those outputs will be unused in the spending transaction and will remain associated with the paper wallet address (you can still potentially lose the change from the transaction if you don't know what you are doing, but that doesn't necessarily mean that the wallet is "empty").

The moment you import the private key from a paper wallet to an online wallet, you immediately loose the security that the paper wallet is providing you.  The moment you broadcast a transaction that spends any of the value from what used to be a paper wallet, you lose even more security.  At that point, if you care enough about security to want a paper wallet in the first place, then you should want to send ALL remaining bitcoins that were associated with that paper wallet to a brand new paper wallet to regain the level of security you previously had.  Doing so will intentionally empty out the previous paper wallet, so there shouldn't be any surprise.

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[DannyHamilton]

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I like in Armory that you can get/add private key, which you can not with Bitcoin.org client (or I don't know how)

You can, but it is considered an advanced function, so it is not a part of the regular user interface.

In the console window you can use the importprivkey and dumpprivkey commands.

[yvv]

This is important to know because 1)almost no one know 2)if you put all your btc on the address of a paperwallet and then you spend a part of them, that paperwallet will become empty. And then if you later try to use that paperwallet... surprise!

Man, this sucks. Should a client allow to choose between anonymity and using paper wallet without pain? The worst thing is that many (including myself before reading thread) really do not know about this dangerous feature.

[DannyHamilton]

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Should a client allow to choose between anonymity and using paper wallet without pain?
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Some do. As a matter of fact, most of the wallets that make it easy to spend funds from a paper wallet also attempt to protect you from this problem.

Which wallet do you use to spend your bitcoins?  This may not be a problem for you at all.

[yvv]

Which wallet do you use to spend your bitcoins?  This may not be a problem for you at all.

I use bitcoin-qt. A paper wallet is not an issue for me now, since I have too few btc to care about security so much. But, man, it is better to know about such things as sending change to new address before using bitcoins.

Buy the way, thanks for all your nice explanations, very informative.

 

[DannyHamilton]

I use bitcoin-qt. A paper wallet is not an issue for me now, since I have too few btc to care about security so much. But, man, it is better to know about such things as sending change to new address before using bitcoins.

Buy the way, thanks for all your nice explanations, very informative.

You will find that it's difficult to create a paper wallet with Bitcoin-Qt (and difficult to spend bitcoins from a paper wallet using Bitcoin-Qt as well).  So while Bitcoin-Qt does send change to a brand new unused address, it would require advanced techniques to use it with a paper wallet and if you are using those advanced techniques, you really should make sure you understand what you are doing first.

[yvv]

Fair enough.

[mad68]

You will find that it's difficult to create a paper wallet with Bitcoin-Qt (and difficult to spend bitcoins from a paper wallet using Bitcoin-Qt as well).  So while Bitcoin-Qt does send change to a brand new unused address, it would require advanced techniques to use it with a paper wallet and if you are using those advanced techniques, you really should make sure you understand what you are doing first.

Which client is the best for you to use paper wallet and to be able to decide where the change is sent back ?
And by the way, I think this topic should be highlighted, it contains many many useful information I think newbies should be aware about.

[induktor]

Hello
I am one! (newbie!)

Can you please explain what do you mean by paper wallet?

i use bitcoin-qt, so if I spend (send) some BTC's to someone, the program will create a new wallet? (private key) to store the change? is this correct? I read the entire post but I quite don't get those two things

thanks
indkt.

[DannyHamilton]

You will find that it's difficult to create a paper wallet with Bitcoin-Qt (and difficult to spend bitcoins from a paper wallet using Bitcoin-Qt as well).  So while Bitcoin-Qt does send change to a brand new unused address, it would require advanced techniques to use it with a paper wallet and if you are using those advanced techniques, you really should make sure you understand what you are doing first.

Which client is the best for you to use paper wallet and to be able to decide where the change is sent back ?
And by the way, I think this topic should be highlighted, it contains many many useful information I think newbies should be aware about.

The web hosted wallet at blockchain.info makes it pretty easy to control which address your change gets sent to.

I'm not sure about Electrum or Armory.  You can look into those yourself, or maybe someone will stop by and let you know.

[DannyHamilton]

Can you please explain what do you mean by paper wallet?

A paper wallet is a way to have an address that bitcoins can be sent to without the private key of that address ever having been accessible from a computer connected to the internet. It provides ultra secure long term storage of bitcoins, but it is very difficult to spend any bitcoins that are received at that address.

https://en.bitcoin.it/wiki/Paper_wallet

i use bitcoin-qt, so if I spend (send) some BTC's to someone, the program will create a new wallet?

No, the program is the wallet.  A wallet can have many bitcoin addresses, the wallet program will create a new address to store the change.

(private key) to store the change? is this correct?

Yes, every bitcoin address has a different private key associated with it.  These private keys are hidden from you by most wallet programs.  Without these private keys, you can not spend the bitcoins, so when you back up a wallet, it is these private keys you are backing up.

[ZerothDim]

Very informative thread, thanks everyone 

[mad68]

Yeah blockchain.info is pretty good, I actually was looking for something similar but as a software and not as a web application

[DannyHamilton]

Yeah blockchain.info is pretty good, I actually was looking for something similar but as a software and not as a web application

I've been pretty happy with the blockchain.info web application.  As far as I can tell it is just about as secure as Electrum and MultiBit.

[induktor]

Thank you DannyHamilton for your explanation, it was crystal clear!

[mad68]

Yeah blockchain.info is pretty good, I actually was looking for something similar but as a software and not as a web application

I've been pretty happy with the blockchain.info web application.  As far as I can tell it is just about as secure as Electrum and MultiBit.

Yes I think I will keep using blockchain.info, I like the mobile app and the provided API so ^^

[mad68]

Ho and just one silly question, when a new address is generated, how to be sure it is unique ? Is it time based ? And what happens if 2 addresses are generated at the exact same time ?

[DannyHamilton]

Ho and just one silly question, when a new address is generated, how to be sure it is unique ? Is it time based ? And what happens if 2 addresses are generated at the exact same time ?

It depends on how you generate the bitcoin address.  If you are using the current version of Bitcoin-Qt, then the address is generated from a random number.  Because the size of the number pool is so large, the odds of generating the same random number as someone else is astronomically small.  So small that it is for all practical purposes impossible.

[mad68]

Ho and just one silly question, when a new address is generated, how to be sure it is unique ? Is it time based ? And what happens if 2 addresses are generated at the exact same time ?

It depends on how you generate the bitcoin address.  If you are using the current version of Bitcoin-Qt, then the address is generated from a random number.  Because the size of the number pool is so large, the odds of generating the same random number as someone else is astronomically small.  So small that it is for all practical purposes impossible.

Ok, and what about addresses generated over bitaddress.org script ?

[Gabi]

Yeah blockchain.info is pretty good, I actually was looking for something similar but as a software and not as a web application

I've been pretty happy with the blockchain.info web application.  As far as I can tell it is just about as secure as Electrum and MultiBit.

Only if you backup the wallet!