Receiving Into Offline Wallet

[bubble1]

I'm new to Electrum, so sorry if this has been asked before.

Following the loss (thankfully small amount) of bitcoin, I decided to set up a cold storage electrum wallet in a newly setup Windows 10 laptop that has never been online.

I read up how to transfer bitcoins from the cold storage to broadcast.

However, how do I put bitcoins that I buy into cold storage?

[1714125278]

1714125278

[mocacinno]

I'm new to Electrum, so sorry if this has been asked before.

Following the loss (thankfully small amount) of bitcoin, I decided to set up a cold storage electrum wallet in a newly setup Windows 10 laptop that has never been online.

I read up how to transfer bitcoins from the cold storage to broadcast.

However, how do I put bitcoins that I buy into cold storage?

You create an address with your offline wallet, transfer this address to an online device and send the address to the sender. He can then fund the address. You don't need to transfer anything "back" to the offline wallet, unless you want to spend your funds.

I've written a longer explanation that covers part of your confusion here: https://bitcointalk.org/index.php?topic=5229700.msg53953744#msg53953744

[bubble1]

I think I understand the idea of the blockchain ledger.

However, perhaps I'm being thick...

An analogy is that my bank statements and my account balances are a filter into the all the entries in the bank's ledger.

With bitcoin core (my now empty wallet) I can see my balances and transactions.

With an offline electrum wallet, where do I see the balances and transactions?

[mocacinno]

--snip--
With an offline electrum wallet, where do I see the balances and transactions?

you don't... at least not on your offline wallet... You use your online (watch-only) wallet, that has been tracking all unspent outputs funding your watch-only address, to create an UNSIGNED transaction.
You then transfer the UNSIGNED transaction from your online (watch only) machine to your offline machine. Since the wallet on the offline machine can derive the private key(s) that correspond to the addresses loaded into your online watch-only wallet, it should be able to sign the unsigned transaction.
You then transfer the signed transaction back to the online machine for broadcasting.

[bubble1]

Ah, thanks. I think I get it.

The online machine is like the book-keepers in the accounts department.

They even have a cheque book, but only the boss (offline) can sign the cheques.

[mocacinno]

Ah, thanks. I think I get it.

The online machine is like the book-keepers in the accounts department.

They even have a cheque book, but only the boss (offline) can sign the cheques.

I guess that's a sensible analogy, indeed

[Lucius]

bubble1, you should read this : https://electrum.readthedocs.io/en/latest/coldstorage.html

I think the whole process is explained in a fairly understandable way, even for beginners. The point is, if you really want cold storage, then this new laptop should never get internet access. Usually people use older PCs/laptops for cold storage, and new computers for watch-only wallets for a broadcast transactions. I never go in that direction, hardware wallet is a much cheaper option - although it must be admitted that properly made cold storage has an even greater level of protection.

[crwth]

Sorry for your loss of BTC. What happened to that anyway? If you don't mind sharing, it's also for protecting future possible events like that from happening.

mocacinno has pretty much said everything about it. I'm just going to share my experience with that kind of wallet.

• I had a hard time transacting from the wallet
  • Whenever I need to transfer funds, I need to turn the laptop on again
  • It's not as portable as hardware wallets
• It's free if you have a spare laptop that you are not going to use

[bubble1]

Yes, I'm happy to share.

Fortunately, my loss was only 0.0045BTC.

Briefly, I often run bitcoin core on my PC even when I'm not transacting bitcoins.

I happened to see a message flash up saying that 0.0045BTC had been sent. WTF!!

I reported this on bitcoin.stackexchange, to try to get to the bottom of it.

One expert explained:

You do not explain why you believe your bitcoin core process sent the bitcoins. It is perfectly possible (from looking at your logs) that it was not sent from your bitcoin core, but from elsewhere on the bitcoin network. It may be possible to track down where the tx was sent from if enough nodes log the IP address of where the transaction was initiated, but there is nothing in your logs to suggest it was initiated from your node. In fact, your logs suggest that it was not initiated from your node.

Therefore, at some point the private keys for your bitcoin address were obtained. This could have been done if your computer contains malware, perhaps a key-logger, which was able to capture your wallet password, in combination with the wallet file.

The output that was spent was populated on 2018-12-28 19:12, but the private key associated with the address could have been created years earlier, as Bitcoin Core by default creates 100 addresses when it is first started, so the private key to this address could have been stored on a computer of yours for some time, perhaps even in an wallet with no password, if you initially didn't enable the password until later. So the time of intercept (of the private key) is theoretically any time between when you first ran Bitcoin Core and when the theft occurred.

My first use of bitcoin core was in 2013, my machine is regularly virus and malware checked, and I believe I never used bitcoin core unencrypted.
 
The full thread is here
https://bitcoin.stackexchange.com/questions/93568/my-bitcoin-core-sent-bitcoins-without-my-authorisation

[bubble1]

bubble1, you should read this : https://electrum.readthedocs.io/en/latest/coldstorage.html

Usually people use older PCs/laptops for cold storage, and new computers for watch-only wallets for a broadcast transactions. I never go in that direction, hardware wallet is a much cheaper option - although it must be admitted that properly made cold storage has an even greater level of protection.

Thanks for the link, which I did read, but it did not explain how the online wallet provided a view of transactions, balances etc.

[alani123]

All you need to do is  store the public key. This key is good for giving to anyone. It can only be used to query the balance in the address and/or send BTC to you. Basically you'll only need to connect the wallet to the a machine with an internet connection once you need to move the coins. But remember that once your private key hits the net then your storage is no longer "Cold" and you should forget about any benefits associated with offline storage.

If you use the private key in a wallet connected online, you should move the rest of the coins to a new address generated offline if you'd like to maintain the benefits of offline storage.

[bubble1]

All you need to do is  store the public key. This key is good for giving to anyone. It can only be used to query the balance in the address and/or send BTC to you. Basically you'll only need to connect the wallet to the a machine with an internet connection once you need to move the coins. But remember that once your private key hits the net then your storage is no longer "Cold" and you should forget about any benefits associated with offline storage.

If you use the private key in a wallet connected online, you should move the rest of the coins to a new address generated offline if you'd like to maintain the benefits of offline storage.

Just for my understanding...
If you follow the procedure here https://electrum.readthedocs.io/en/latest/coldstorage.html for signing transactions in the off line wallet and then return the signed transaction to the online wallet, does this expose my private key?

[alani123]

All you need to do is  store the public key. This key is good for giving to anyone. It can only be used to query the balance in the address and/or send BTC to you. Basically you'll only need to connect the wallet to the a machine with an internet connection once you need to move the coins. But remember that once your private key hits the net then your storage is no longer "Cold" and you should forget about any benefits associated with offline storage.

If you use the private key in a wallet connected online, you should move the rest of the coins to a new address generated offline if you'd like to maintain the benefits of offline storage.

Just for my understanding...
If you follow the procedure here https://electrum.readthedocs.io/en/latest/coldstorage.html for signing transactions in the off line wallet and then return the signed transaction to the online wallet, does this expose my private key?

This is a good way to create transactions without exposing a private key, but if the "Offline" machine connects to the internet at any point (even let's say after uninstalling the wallet and deleting private keys from memory) then the address no longer cold storage.

[bubble1]

All you need to do is  store the public key. This key is good for giving to anyone. It can only be used to query the balance in the address and/or send BTC to you. Basically you'll only need to connect the wallet to the a machine with an internet connection once you need to move the coins. But remember that once your private key hits the net then your storage is no longer "Cold" and you should forget about any benefits associated with offline storage.

If you use the private key in a wallet connected online, you should move the rest of the coins to a new address generated offline if you'd like to maintain the benefits of offline storage.

Just for my understanding...
If you follow the procedure here https://electrum.readthedocs.io/en/latest/coldstorage.html for signing transactions in the off line wallet and then return the signed transaction to the online wallet, does this expose my private key?

This is a good way to create transactions without exposing a private key, but if the "Offline" machine connects to the internet at any point (even let's say after uninstalling the wallet and deleting private keys from memory) then the address no longer cold storage.

Point taken.
I'm planning to use an old laptop for cold storage.
If I need to change, I would destroy the disk, and the RAM DIMMs.
Then I'd recreate the wallet using the seed phrase.

That should be safe.