Mining Lab · Coinovo Academy · Wallets and keys
What you never hand over
Coins live in the blockchain, not in the wallet. The wallet holds the keys that let payments be signed. If it is lost, the coins are not gone, only the access to them.
A wallet is a keyring, not a purse.
A public address is derived from the private key. The path works only in that direction: the private key cannot be computed back from the address. You may give the address to anyone, the private key to nobody.
When set up, a wallet shows a row of words. All keys can be restored from them. Whoever has them has your money, with no password, no query, from any device in the world.
The words belong on paper, not in a photo and not in the cloud.
The words are not a memory aid, they ARE the key. Each comes from a list of 2048, so each carries eleven bits. Twelve words are 132 bits, four of them a checksum: 128 bits of randomness.
128 bits is 2 to the power of 128 possibilities, a number with 39 digits. Trying them all is not hard but impossible, and not for want of money but for want of energy: a computer counting through that many states would need more than the sun gives off in its lifetime.
The checksum serves a practical purpose: if you mistype while copying, restoring gives you an error rather than an empty wallet. Which is exactly why the practice run matters.
Some people want to replace the twelve words with a sentence of their own because it is easier to remember. That is the most reliable way to lose everything.
A person inventing a sentence produces between 20 and 40 bits of randomness, not 128. There are programs that search for exactly that: they run through song lines, bible verses, proverbs and keyboard patterns in every language and empty the balances hanging on them. Such addresses are drained within minutes.
The randomness from the device is not a convenience you can trade away. It is the one part of the procedure that cannot be guessed.
If your bitcoin sit at an exchange, the exchange holds the keys. You have a claim against a company, not coins. Several large exchanges have become insolvent; their customers' balances were then part of the estate.
Buying and selling. The question is not exchange or self-custody, but how long something stays there. Whoever trades needs one; whoever holds does not have to do it there.
A public address is visible to everyone in the blockchain anyway. Looking up its balance and movements is no risk. The only thing to weigh is privacy: whoever knows your address sees everything that happens on it.
Tasks, shifts and the daily hunt, plus an account that shows what has added up.
Opens straight away. No account, nothing to install.