Still a little confused on Wallets.

[Abacinate]

1) Is there any reason to save old wallet files if I'm generating a new backup after receiving some BTC?
2) Is there even any reason to generate a new backup after receiving some BTC or does the wallet backup just contain the private keys associated with the public keys, and it will be the exact same file regardless if the balance is updated?
3) As I understand it, an offline/paper wallet saves the private key to paper, and this is required to send money from that address. Is this right?

Thanks.

[1714535659]

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[1714535659]

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[1714535659]

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[Rayen]

1) No.
2) No.
3) Yes.

[redemptor]

4) Is it wasteful to discard lightly used wallets?

5)Is there a place to recycle wallets that you no longer use?

6)If more than 21 million people  want a wallet,do we get to pick who we have to share with?

[carebear]

4). Discard them? What? Why?

5). No, you wouldn't need to do that.

6). Wallets, and wallet addresses can be infinite

[Abacinate]

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

[carebear]

... too many questions XD

Sorry, can't answer that.

[lexis200]

Good thread 

Is it an issue to have loads of addresses? I've got 7 at the moment labelled so I know who's paying me. Can I have hundreds of addresses if I want?

[Kruncha]

Good thread 

Is it an issue to have loads of addresses? I've got 7 at the moment labelled so I know who's paying me. Can I have hundreds of addresses if I want?

You can have as many as you like - 100 are automatically generated the minute you get a wallet, but you can have more.

K.

[Kruncha]

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

I may be mistaken here, but I think it also contains other info on the addresses your using etc. Have you added an address or anything between backups?

K.

[Tirapon]

As I understand it, the qt client generates 100 addresses the first time it's run, and whenever a new address is required, it pulls one from the pool. at the same time, it generates a new one which gets added (keeping a constant pool of 100). This means that for every 100 addresses that get used, you have to make another backup of your wallet. Addresses don't only get pulled from the pool when you decide to create a new receiving address. They are used for 'change' transactions. These occur due to the way the protocol is designed.

As an example, imagine you buy your first bitcoins: lets say you buy 5, which get sent in one transaction to your first address. Now you decide you want to send 1 bitcoin to somebody - the client creates a transaction which spends the full balance of 5 BTC, 1 to the address of the person you are sending to, and 4 as 'change' back to yourself, a different address which you control. This address is pulled from the client's pool of 100 addresses, so you should back up after every 100 transactions.

I'm not sure exactly why it works like this, I'm sure there's a reason.

Armory is a client which works deterministically, meaning that new addresses are generated in a pre-determined manner. This means you only need to back up once. It's also a great way to store coins securely, if you have a spare old laptop to run an offline wallet.

[Abacinate]

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

I may be mistaken here, but I think it also contains other info on the addresses your using etc. Have you added an address or anything between backups?

K.

No, and in fact Blockchain sent me another automatic backup that has yet another series of letters and numbers. I imported all of them to my wallet at Blockchain and it did nothing as I expected. But I don't understand why I have three different backups now.

[deepceleron]

Bitcoin gives you all you can eat addresses for free! Just put keypool=10000 in your bitcoin.conf file, now your wallet has 10,000 pregenerated addresses in it (you'll have a backup that never becomes obsolete).

There are 1461501637330902918203684832716283019655932542976 possible addresses. That's enough for 100x the world's current population to have 1826877046663628647754606040895353774 addresses each.

There will be a maximum of 2100000000000000 Bitcoin base units (a satoshi, or 0.00000001 bitcoin).
Even if every single base unit that will ever be created were put in a different address, there will still be 1461501637330902918203684832716280919655932542976 empty addresses. The chance of you generating an address that has a satoshi in it will be 1 in 695953160633763294382707063198230.

So in other words, it doesn't matter if you create lots of addresses and delete them. If you never use them, the network doesn't even know they exist.

[lexis200]

Now that's a lot of numbers!

Thanks for the explanation, I have another question though... Each time you generate a new address, it's totally random right? I know that the odds are against it but can an address be generated twice? Seeing as you seem to like numbers, and I'm curious about it, what are the odds of that happening, and are there safeguards in place?

[DannyHamilton]

1) Is there any reason to save old wallet files if I'm generating a new backup after receiving some BTC?

Which wallet?  If you are talking about Bitcoin-Qt, then it might be a good idea to keep a few of the recent backups in case the most recent backup turns out to be damaged or unrecoverable for some reason.   The advice might be different if you are not using Bitcoin-Qt.

2) Is there even any reason to generate a new backup after receiving some BTC or does the wallet backup just contain the private keys associated with the public keys, and it will be the exact same file regardless if the balance is updated?

Which wallet?  If you are talking about Bitcoin-Qt, then it uses a new address (and therefore a new private key) every time you send a transaction (although it doesn't tell you that it used a new address).  It isn't necessary to backup after EVERY transaction that you send or receive, but it is a good idea to backup on a regular basis.  This way you will be sure to have a backup of any recently generated keys/address, and you'll have multiple copies in case one copy turns out to be unrecoverable.  The advice might be different if you are not using Bitcoin-Qt.

3) As I understand it, an offline/paper wallet saves the private key to paper, and this is required to send money from that address. Is this right?

Yes.

4) Is it wasteful to discard lightly used wallets?

If there are any bitcoins still in the wallet and you don't have any other backups?  Yes.  Otherwise, no.

5)Is there a place to recycle wallets that you no longer use?

If there are any bitcoins still in the wallet?  Sure.  You can email it to me.

6)If more than 21 million people  want a wallet,do we get to pick who we have to share with?

No sharing necessary.  Everyone gets their own wallet.  There are plenty.

There are a maximum of a bit less than 21 million "bitcoins", but each wallet can hold fractions of a bitcoin.

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

Which wallet? If you are talking about Bitcoin-Qt, then there is transaction information stored in the wallet.dat file in addition to the private keys, the bitcoin addresses, and any description you've added.

Is it an issue to have loads of addresses? I've got 7 at the moment labelled so I know who's paying me. Can I have hundreds of addresses if I want?

Yes you can have hundreds if you want.  It is recommended that you use a new address for every transaction.  This increases security, privacy, and anonymity.

This address is pulled from the client's pool of 100 addresses, so you should back up after every 100 transactions.

It would be better to backup BEFORE 100 transactions.  If you create 10 addresses, and then send 100 transactions, you'll likely have used 110 addresses.  That means for the 10 most recent transactions you don't have a good backup and if your computer crashes, you could potentially lose bitcoins.

I'm not sure exactly why it works like this, I'm sure there's a reason.

It provides increased security, privacy, and anonymity.

Armory is a client which works deterministically, meaning that new addresses are generated in a pre-determined manner. This means you only need to back up once. It's also a great way to store coins securely, if you have a spare old laptop to run an offline wallet.

I agree. If you have the spare equipment and willingness to tolerate the slight increase in inconvenience, Armory is a great option.

Each time you generate a new address, it's totally random right?

Yes.

I know that the odds are against it but can an address be generated twice?

Realistically, no.  But there is nothing preventing it beyond the astronomical improbability of it.

Seeing as you seem to like numbers, and I'm curious about it, what are the odds of that happening, and are there safeguards in place?

There are no safeguards beyond the size of the numbers.

If I generate an address, the odds that you could then generate that same address are somewhere around:

1/(2¹⁶⁰) = 0.00000000000000000000000000000000000000000000068% (6.84 x 10^-47)

(I may have one too many or too few zeros in there.  I lost count).

That's approximately a 1 in 1,461,501,600,000,000,000,000,000,000,000,000,000,000,000,000,000 (1.46 x 10⁴⁸) chance.

[tjamz]

1) Is there any reason to save old wallet files if I'm generating a new backup after receiving some BTC?

Thanks.

there is always the chance of "bit rot", it's a good idea in general to keep the last "X" backups of a file in case it turns out somehow it got silently corrupted

[OkElmo]

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

Every time you send money, a new address is created to receive the "change". (Not quite change, but close enough to call it that). If you receive 100BTC from someone then restore your old wallet, you'll still have the 100BTC. If you then send someone 1BTC and restore your old wallet, all your money will be gone -- the 99BTC "change" will have been put into an invisible address which is only present in your new wallet.
There are coin-control forks of bitcoin for avoiding this, but if you don't know how to use them you can seriously compromise the anonymity of your transactions.

Edit - Re the "recycling" of addresses/wallets: Wallets are never "registered" with other clients. You can send money to a wallet that doesn't exist, then if you're the luckiest guy who ever lived, generate that wallet a year later and find the funds you sent (back when it didn't exist) already in it. The chances of you generating it though is small enough to be considered impossible.
The flipside to this coin is that wallets never need to be unregistered either. Simply not using an address is enough to 'recycle' it.

[DannyHamilton]

Every time you send money, a new address is created to receive the "change". (Not quite change, but close enough to call it that). If you receive 100BTC from someone then restore your old wallet, you'll still have the 100BTC. If you then send someone 1BTC and restore your old wallet, all your money will be gone -- the 99BTC "change" will have been put into an invisible address which is only present in your new wallet.

This really depends on which wallet you are using.  They don't all work this way.

Assuming that you are talking about Bitcoin-Qt, keep in mind that with default settings it pre-generates the next 100 addresses that it will use.  When it sends "change", it send it to one of these pre-generated addresses.  This means that "If you then send someone 1BTC and restore your old wallet", your money won't "be gone" unless you have used up more than 100 addresses since you created the backup.  Otherwise, the "invisible address" will already be in your backup.

[Abacinate]

1) Is there any reason to save old wallet files if I'm generating a new backup after receiving some BTC?

Which wallet?  If you are talking about Bitcoin-Qt, then it might be a good idea to keep a few of the recent backups in case the most recent backup turns out to be damaged or unrecoverable for some reason.   The advice might be different if you are not using Bitcoin-Qt.

2) Is there even any reason to generate a new backup after receiving some BTC or does the wallet backup just contain the private keys associated with the public keys, and it will be the exact same file regardless if the balance is updated?

Which wallet?  If you are talking about Bitcoin-Qt, then it uses a new address (and therefore a new private key) every time you send a transaction (although it doesn't tell you that it used a new address).  It isn't necessary to backup after EVERY transaction that you send or receive, but it is a good idea to backup on a regular basis.  This way you will be sure to have a backup of any recently generated keys/address, and you'll have multiple copies in case one copy turns out to be unrecoverable.  The advice might be different if you are not using Bitcoin-Qt.

I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?

Which wallet? If you are talking about Bitcoin-Qt, then there is transaction information stored in the wallet.dat file in addition to the private keys, the bitcoin addresses, and any description you've added.

I'm using the BlockChain.info online wallet. Are you saying Bitcoin-Qt sends the BTC from a different address and thus changes your address every time a transaction is done? That's crazy..

For your final note, "the bitcoin addresses".. Does that refer to the address that sent them to me? Why would it store that? Shouldn't that be available on the block chain and thus unnecessary to store?

This whole wallet situation is enormously confusing for new users and is a massive barrier to entry. I can't see BTC being adopted mainstream when it's this difficult to work through how to take care of your wallet and protect your money.

Is there an in depth article explaining how wallets work? I've read several short articles at various websites online, but none of them go deep enough to truly understand how the system works. Someone saying here that you can lose 99 BTC by using the wrong backup file is very confusing and makes no sense to me.

Thanks for spending the time explaining a little bit.

[DannyHamilton]

I'm using the BlockChain.info online wallet. Are you saying Bitcoin-Qt sends the BTC from a different address and thus changes your address every time a transaction is done? That's crazy..

With Bitcoin-Qt, you don't have "an address", you have a wallet.  You can create as many receiving addresses as you want in that wallet, and give those out for others to send bitcoins to your wallet.  You have no control over which of these bitcoins are used when you send bitcoins somewhere.  The wallet takes care of all that for you.  Every transaction sends some bitcoins back to your wallet at a new address that the wallet keeps track of, but that is not shown to you, since you don't need it.

For your final note, "the bitcoin addresses".. Does that refer to the address that sent them to me? Why would it store that? Shouldn't that be available on the block chain and thus unnecessary to store?

No, that refers to the list of bitcoin addresses that you create in your wallet to receive bitcoins.  The wallet needs to store these addresses so it can show them to you so you can give them out to others that want to send you bitcoins.

This whole wallet situation is enormously confusing for new users and is a massive barrier to entry. I can't see BTC being adopted mainstream when it's this difficult to work through how to take care of your wallet and protect your money.

Yes. At this point bitcoin is still in its infancy.  It will be interesting to see if it ever reaches mainstream use or if it just ends up a failed experiment, but if it is going to be successful long term, there is a lot of infrastructure that is still needed.

Is there an in depth article explaining how wallets work? I've read several short articles at various websites online, but none of them go deep enough to truly understand how the system works. Someone saying here that you can lose 99 BTC by using the wrong backup file is very confusing and makes no sense to me.

Each wallet works a bit differently and has its own "quirks".  They are all created by volunteers with no oversight beyond the interests and desires of the creator.  Over time, through competition and other market forces wallets will be improved and newer better wallets will be created.  Today's web browsers have very little in common with the web browsers from 1992.  Feel free to learn about the wallets and write your own article and/or review.

Thanks for spending the time explaining a little bit.

No problem.  I'll do what I can to answer as many questions as you have.  The more we all understand about the wallets, the easier it is to choose for ourselves and recommend for others which is best for each person's individual needs.  I'm not much good at writing up well structured usable documentation, but I've got a pretty good understanding of most of the popular wallets out there and do a half-way-decent job of explaining in a conversational manner.

[kittycatman]

what would happen if you had a memory error when writing your private key to disk...

how can you confirm that your wallet's private key is actually valid?

/paranoid