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In the first implementations of bitcoin clients, wallets were simply collections of randomly generated private keys. This type of wallet is called a _Type-0 Non-Deterministic Wallets_. For example, the Bitcoin Core Client pre-generates 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, backup and import. 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 non-deterministic wallet is a poor choice of wallet, especially if you want to avoid address re-use as that means managing many keys, which creates the need for frequent backups. While the Bitcoin Core Client includes a wallet that is implemented as a Type-0 wallet, the use of this wallet is actively discouraged by developers of the Bitcoin Core.
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Andreas M. Antonopoulos
10 years ago