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Author Topic: Who pays to create a wallet and store wallet on blockchain?  (Read 587 times)
steelhouse (OP)
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January 08, 2017, 06:39:58 PM
 #1

They say the wallet is stored on the blockchain.  When you create a wallet, there are no fees.  Who pays for this?  Also this wallet is created instanteously.  Thus, your wallet must be on a centralized server of electrum?
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The network tries to produce one block per 10 minutes. It does this by automatically adjusting how difficult it is to produce blocks.
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shorena
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January 08, 2017, 06:43:12 PM
 #2

They say the wallet is stored on the blockchain.  When you create a wallet, there are no fees.  Who pays for this?

Whoever said that has a misunderstanding of what a wallet is. Wallets are not stored on the blockchain, they are stored on your local machine or with the service you are using. In the case of electrum (you posted in the electrum sub after all) the wallet file is stored on your local machine.

Im not really here, its just your imagination.
steelhouse (OP)
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January 08, 2017, 06:53:43 PM
Last edit: January 08, 2017, 07:07:32 PM by steelhouse
 #3

They say the wallet is stored on the blockchain.  When you create a wallet, there are no fees.  Who pays for this?

Whoever said that has a misunderstanding of what a wallet is. Wallets are not stored on the blockchain, they are stored on your local machine or with the service you are using. In the case of electrum (you posted in the electrum sub after all) the wallet file is stored on your local machine.

You can recover your wallet from the 12 word seed.   If you have nothing, you can retrieve your wallet from the 12 word seed.  When you receive this wallet there is no password on it.  It is all instantaneous, thus how can it be on the blockchain if there is no fee?

If you create a electrum wallet, send 5 bitcoins to it.  Send 2 btc to someone, then delete the wallet.   You can then retreive your wallet immediately on another computer.

To try to make the question more clear say you have a fresh install of windows.  You download electrum and retrieve your wallet with 12 words.   Suppose you have 100s of transactions.  Where did you wallet retrieve from?  It can't be bitcoin blockchain since no fees were paid and it is all instantaneous.   You might have retrieved 1000 bytes of info from 60 bytes of words.
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January 09, 2017, 02:13:50 AM
 #4

They say the wallet is stored on the blockchain.  When you create a wallet, there are no fees.  Who pays for this?

Whoever said that has a misunderstanding of what a wallet is. Wallets are not stored on the blockchain, they are stored on your local machine or with the service you are using. In the case of electrum (you posted in the electrum sub after all) the wallet file is stored on your local machine.

You can recover your wallet from the 12 word seed.   If you have nothing, you can retrieve your wallet from the 12 word seed.  When you receive this wallet there is no password on it.  It is all instantaneous, thus how can it be on the blockchain if there is no fee?
Your address IS NOT stored on the blockchain. The blockchain is merely a ledger which contains all the transactions that has occurred since the start of Bitcoin. The address generation does not involve the blockchain.

The 12 word seeds generates a list of addresses which users can send Bitcoins to. When you spend the Bitcoin, your transaction is relayed onto the Electrum server, relayed to the Bitcoin Full nodes and the full nodes will look at their Blockchain to find an unspent output the transaction used. If they can find the unspent output, the transaction is valid. Full nodes operators are not paid for this.
If you create a electrum wallet, send 5 bitcoins to it.  Send 2 btc to someone, then delete the wallet.   You can then retreive your wallet immediately on another computer.

To try to make the question more clear say you have a fresh install of windows.  You download electrum and retrieve your wallet with 12 words.   Suppose you have 100s of transactions.  Where did you wallet retrieve from?  It can't be bitcoin blockchain since no fees were paid and it is all instantaneous.   You might have retrieved 1000 bytes of info from 60 bytes of words.
Electrum servers, which are backed by Bitcoin full nodes. The Electrum server indexes all the transactions and acts a little bit like a Bitcoin full node, which can supply information such as transaction information and broadcast transactions sent from the Electrum client.

Electrum generates your addresses and query Electrum server for Bitcoin blockchain information such as the list of transaction that has occurred, current block height etc.

Lets talk about the actual Bitcoin since your question now is mainly about how can the information about an address be found without any fee. For Bitcoin Core, they download a copy of the Blockchain from another full node. As the client synchronize, the client searches the Blockchain for transactions related to the wallet.
For example:
If your address is 1ABCD
1ABC sent 1 BTC to 1ABCD =1BTC Balance
1COM sent 0.5BTC to 1ABCD= 1.5BTC Balance
1ABCD sent 1 BTC to 1ORG = 0.5BTC Balance.

Hence, your final balance is 0.5BTC.

These transactions are available on the Bitcoin Blockchain and this is how all the transactions about the wallet is found. Addresses are not stored on the Blockchain, but rather the transactions are. Your client merely uses the Blockchain to get any information about your address.

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steelhouse (OP)
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January 09, 2017, 03:18:52 AM
 #5

Your entire wallet can be retrieved from the password seed and the keys to unlock it.

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2  suppose this is a bitcoin receive address.  

here is a typical seed

constant forest adore false green weave stop guy fur freeze giggle clock

There is more info in the bitcoin address than the seed.

You send your 12 word seed to an electrum server and they send back to you at minimum an address of your wallet but then you also need the private key to the wallet.  I realize from wallet an algorithm is used to generate all your receive addresses.


to summarize, it seems from your 12 word seed you generate a private key on your computer.  Then you then send public keys to electrum servers and they send you back all the info for that wallet?  Sort of the way you can go to blockchain.info and enter an address and it can send back to all the info about that address.  

Just trying to figure out how it works as it is NOT in the faq.
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January 09, 2017, 03:26:17 AM
 #6

Your entire wallet can be retrieved from the password seed and the keys to unlock it.

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2  suppose this is a bitcoin receive address.  

here is a typical seed

constant forest adore false green weave stop guy fur freeze giggle clock

There is more info the bitcoin address than the seed.

You send your 12 word seed to an electrum server and they send back to you at minimum an address of your wallet but then you also need the private key to the wallet.  I realize from wallet an algorithm is used to generate all your receive addresses.


to summarize, it seems from your 12 word seed you generate a private key on your computer.  Then you then send public keys to electrum servers and they send you back all the info for that wallet?  Sort of the way you can go to blockchain.info and enter an address and it can send back to all the info about that address.  

Just trying to figure out how it works as it is NOT in the faq.

The seed is never sent to an electrum server; only public keys/addresses are sent to the electrum servers. The seed generates your private addresses locally on your PC. The application only contacts the Electrum servers to get information on the balances of your addresses and synchronize blockchain data.
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January 09, 2017, 03:30:43 AM
 #7

Your entire wallet can be retrieved from the password seed and the keys to unlock it.

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2  suppose this is a bitcoin receive address.  

here is a typical seed

constant forest adore false green weave stop guy fur freeze giggle clock

There is more info the bitcoin address than the seed.

You send your 12 word seed to an electrum server and they send back to you at minimum an address of your wallet but then you also need the private key to the wallet.  I realize from wallet an algorithm is used to generate all your receive addresses.
Your 12 word seeds generates addresses locally. No sensitive information (e.g. private keys and seeds) are transferred to the server.
to summarize, it seems from your 12 word seed you generate a private key on your computer.  Then you then send public keys to electrum servers and they send you back all the info for that wallet?  Sort of the way you can go to blockchain.info and enter an address and it can send back to all the info about that address.  

Just trying to figure out how it works as it is NOT in the faq.

You can interpret as that.

Being an SPV wallet, Electrum fetches addresses from a single server but it does download the block headers from several other servers. The block headers is used to verify that if a transaction is included in a specific block.

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steelhouse (OP)
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January 09, 2017, 03:32:30 AM
Last edit: January 09, 2017, 03:53:53 AM by steelhouse
 #8

How many bytes is a typical private key?  If does not seem like enough.  The seed is rather small compared to a typical bitcoin private key.  The vowels can also be eliminated.  I think I will keep regular client.
ranochigo
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January 09, 2017, 04:00:32 AM
 #9

How many bytes is a typical private key?  If does not seem like enough.  The seed is rather small compared to a typical bitcoin private key.  The vowels can also be eliminated.  I think I will keep regular client.
A typical private key is 33bytes, IIRC.

The seed is much more userfriendly as compared to clients that do not use HD deviation. Hierarchical deterministic wallets enables the seed to create an unlimited number of private keys and the change address and every other address used can be derived from the seed. The seed can be used to derive a private key too. What do you mean by having the vowels eliminated?

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pooya87
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January 09, 2017, 05:23:12 AM
 #10

How many bytes is a typical private key?  If does not seem like enough.  The seed is rather small compared to a typical bitcoin private key.  The vowels can also be eliminated.  I think I will keep regular client.

the seed created by Electrum has 128 bits of entropy which is as safe as private keys.
you can read more about seeds: http://docs.electrum.org/en/latest/seedphrase.html
BIP39: https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki
also read these two (they explain it well enough):
https://bitcointalk.org/index.php?topic=1606740.msg16154287#msg16154287
https://bitcointalk.org/index.php?topic=1623339.msg16319650#msg16319650

A typical private key is 33bytes, IIRC.
according to wiki if i understand it correctly it is 32 bytes (256 bits) and in some wallets can be between 128 and 512 bits

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shorena
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January 09, 2017, 07:09:59 AM
 #11

How many bytes is a typical private key?  If does not seem like enough.  The seed is rather small compared to a typical bitcoin private key.  The vowels can also be eliminated.  I think I will keep regular client.

The seed is the starting point for an algorithm that (re)creates the private keys. As long as you know the correct starting point you can (re)create (or rather derive) as many private keys from it as you want. Due to the way its designed its just as secure as other wallets. In fact most wallets use this scheme called HD now. HD as in hierarchical deterministic.

Im not really here, its just your imagination.
steelhouse (OP)
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January 10, 2017, 09:25:57 AM
Last edit: January 10, 2017, 09:39:46 AM by steelhouse
 #12

the seed created by Electrum has 128 bits of entropy which is as safe as private keys.

This also puts up a red flag, 128 bits of entropy.  Why not just say 128 random bits or 128 bits of info.  Why create another term.  

It also seems it might be possible to create a database of seeds.  If computing power increases and users increases.  You might get a match.  Always wary of when passwords are shortened.

128 bits/ 8 bits per byte is 16 bytes of information.
ranochigo
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January 10, 2017, 10:33:50 AM
 #13

the seed created by Electrum has 128 bits of entropy which is as safe as private keys.

This also puts up a red flag, 128 bits of entropy.  Why not just say 128 random bits or 128 bits of info.  Why create another term.  

It also seems it might be possible to create a database of seeds.  If computing power increases and users increases.  You might get a match.  Always wary of when passwords are shortened.

128 bits/ 8 bits per byte is 16 bytes of information.
Of course you can create a database of seeds. You probably won't do that if you're looking for profit or else, you are probably crazy.

We have the word list here, https://github.com/spesmilo/electrum/blob/a3b4409e6e8d1c510f53494ca068633ce03f0cc7/lib/wordlist/english.txt.

As you can see in the wordlist, there are 2048 words available to be assigned to one of the word in a 13 word seed.

If we assume that the seed is in English, there are 2048^13 possibilities for a seed. If you can bruteforce 1million of them in a second.
(2048^13)/1,000,000=1.115303726x10^37 seconds needed
=1.858395433X10^35 minutes
=3.097325722X10^33 hours
=1.290552384X10^32 days
=4.301841281X10^30 months
=1.178586652X10^28 years.

This is if you are bruteforcing without checking the network if the addresses had any transactions. Let me know when you find the rate where you can bruteforce a seed in a lifetime.

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