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myarbrough@oreilly.com 2014-11-25 12:54:26 -08:00
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@ -559,14 +559,14 @@ Bitcoin wallets contain keys, not coins. Each user has a wallet containing keys.
((("nondeterministic wallets")))((("random wallets")))((("Type-0 nondeterministic wallet")))((("wallets","nondeterministic")))((("wallets","random")))In the first bitcoin clients, wallets were simply collections of randomly generated private keys. This type of wallet is called a _Type-0 nondeterministic wallet_. For example, the((("Just a Bunch Of Keys (JBOK) wallets"))) Bitcoin Core client pregenerates 100 random private keys when first started and generates more keys as needed, using each key only once. This type of wallet is nicknamed "Just a Bunch Of Keys," or JBOK, and such wallets are being replaced with deterministic wallets because they are cumbersome to manage, back up, and import. ((("backups","of random wallets")))((("random wallets","backing up")))The disadvantage of random keys is that if you generate many of them you must keep copies of all of them, meaning that the wallet must be backed up frequently. Each key must be backed up, or the funds it controls are irrevocably lost if the wallet becomes inaccessible. This conflicts directly with the principle of avoiding address re-use, by using each bitcoin address for only one transaction. Address re-use reduces privacy by associating multiple transactions and addresses with each other. A Type-0 nondeterministic wallet is a poor choice of wallet, especially if you want to avoid address re-use because that means managing many keys, which creates the need for frequent backups. Although the Bitcoin Core client includes a Type-0 wallet, using this wallet is discouraged by developers of Bitcoin Core. <<Type0_wallet>> shows a nondeterministic wallet, containing a loose collection of random keys.
[[Type0_wallet]]
.Type-0 nondeterministic (random) wallet: a collection of randomly generated keys
image::images/msbt_0408.png["non-deterministic wallet"]
==== Deterministic (Seeded) Wallets
((("deterministic wallets")))((("seeded wallets")))((("wallets","deterministic")))((("wallets","seeded")))Deterministic, or "seeded" wallets are wallets that contain private keys that are all derived from a common seed, through the use of a one-way hash function. The seed is a randomly generated number that is combined with other data, such as an index number or "chain code" (see <<hd_wallets>>) to derive the private keys. In a deterministic wallet, the seed is sufficient to recover all the derived keys, and therefore a single backup at creation time is sufficient. The seed is also sufficient for a wallet export or import, allowing for easy migration of all the user's keys between different wallet implementations.
[[Type0_wallet]]
.Type-0 nondeterministic (random) wallet: a collection of randomly generated keys
image::images/msbt_0408.png["non-deterministic wallet"]
[[mnemonic_code_words]]
==== Mnemonic Code Words