Doing The Dance: The Art of Managing Multiple Bitcoin Wallets
The recent rise in Bitcoin prices has no doubt fueled a flood of interest from newbies seeking to capitalize on the gains. With this has come questions as to how best to store newly acquired coins.
One question that often surfaces on bitcoin online forums is whether a Bitcoin wallet has to be limited to just one device, given a person’s natural desire to want to have multiple access points, much like an online bank account. While many choose the ease and simplicity of storing their bitcoin on custodial wallets like Coinbase, experienced users understand the perils of having their bitcoin holdings controlled by others and opt for other options.
To offer some perspective on this dilemma, we turned to Bitcoin product tester and UX specialist Patrick Patton to provide some thoughts on how one can access private wallets across multiple devices (PC/Mac and mobile) in an easy and efficient way.
“The easiest way is to download a wallet like Copay to run on both mobile and desktop devices (alternatively, use Mycelium or Breadwallet as the mobile apps), then use the master seed from the first installation to “restore” a wallet on the second and subsequent installations. While this gives you send and receive access across all devices, it also expands your risk profile to include any attack surfacing from any platform! Therefore, I don’t recommend this method. Moreover, it is also why I don’t recommend Blockchain.info.”
“The next way is to use multiple wallets but split your total bitcoin holdings between them. To do this, it requires backing up more than one wallet seed, but each is isolated from the other if one develops a problem. Tracking your total bitcoin holdings is harder this way. Some people even use spreadsheets or other financial software to follow it all, especially if they have paper wallets also. Not fun!”
“A third way is to use one wallet on one device and import it’s xpub (extended public key) into another. Mycelium (on Android) can import Copay and Mycelium xpubs plus Trezor, Ledger, and KeepKey hardware wallets. Copay can import Copay wallet files plus Trezor and Ledger. Electrum (on a desktop) can import Mycelium, Copay, Airbitz, and itself. Blockonomics.co (website) can import all of these. This method, I am most fond of and can be combined with either of the preceding methods for even more flexibility. Some examples are needed to understand this correctly”:
Setup one full wallet on a desktop using Copay and export that wallet without private keys to a Copay wallet on mobile. There you can track your balance and receive payments, but not be able to spend from the mobile wallet (any compromise of your receive-only wallet would leak your privacy, not your bitcoin).
Setup a full Airbitz/Mycelium/Copay wallet on mobile, then export it’s xpub to an Electrum wallet on a desktop (or Copay mobile to Copay desktop). Here you can track your balance and generate new addresses to receive funds on the desktop, but only be able to spend bitcoin from your mobile wallet. Since mobile operating environments are typically more secure than desktop equivalents, and because you can use your bitcoin on the go with mobile, I would recommend this path. Mycelium can also track any paper wallets you have without needing the private key.
Setup multiple full wallets on mobile, desktop, or paper and track them all separately and in aggregate via Blockonomics.co. Import each wallet’s xpub into your Wallet Watcher account at Blockonomics.co to see each balance (and total balance) and generate addresses for each, plus create quickly hosted invoices off of those addresses. You can access Blockonomics.co from any web browser, but you can only spend with the full wallets on their own devices. Compromise of Blockonomics.co will only leak your privacy settings, not your bitcoin.
“Blockonomics is a free and convenient service for those who want to monitor multiple wallets (including paper wallets) and keep an eye on your holdings. Although it’s required to trust them somewhat with your privacy using a regular account, you can also choose to use Tor or a VPN and Blockonomics’ guest login to track your total holdings pseudo-anonymously (throw in random addresses you don’t control for further obfuscation).”
Finally, a warning from Patton:
“Be sure to test everything you setup with small amounts before choosing to rely on a particular solution! Some wallets are incompatible with others and may generate unspendable addresses. Check to see that each xpub import shows the correct next address and balance. The pairings above are based on my experience, but not guaranteed. Be sure to backup every full wallet you create!”