Coinbase launches USD Wallets for instant transactions | BankNXT

Wallets for Bitcoin

Bitcoin Wallet / December 17, 2018

At BlockCypher, we’re committed to making blockchain development easier for developers. Most of the time, that means creating robust and reliable APIs, keeping our uptime stratospherically high, and providing stellar customer support.

Sometimes, furthering that mission means going a bit outside of our wheelhouse. Today, we’re excited to introduce an open source wallet that leverages the power of our API for Bitcoin (and Litecoin and Dogecoin) applications: bcwallet.

Why Another Wallet?

Before talking about why we built bcwallet — and who it’s for — it’s critical to highlight the other wallets we’re not competing against. Consumers who want absolute security should consider using dedicated hardware wallets (like our customer we just profiled, KeepKey). Non-developers who want a place to easily transfer small amounts should consider web wallets (like Coinbase or Xapo).

So Why is bcwallet So Money?

We’re obviously unabashedly biased here, but there’s a lot to love about the bcwallet approach. Thanks to the BlockCypher API integration and eschewing a GUI, the wallet itself is quite lightweight and easy to audit; bcwallet has fewer lines of code than almost every other open source wallet.

But despite the low LoC count and audibility, bcwallet follows best practice by taking advantage of Hierarchical Deterministic (HD) Seeds. HD Seeds/Wallets are incredibly useful; by creating a “master seed” that generates “child” key pairs, you can help protect your privacy and prevent public key reuse. Before HD, if you were engaging in thousands of bitcoin transactions — and wanted to follow best practice by using a public address only once — that meant keeping track of thousands of private-public key pairs. It’s no wonder in the pre-HD days bitcoin users would pass the time by dumpster-diving for $9 million hard drives.

HD significantly mitigates this problem. While many wallets today offer HD key derivation, they generally hide the mechanics from the user. Not bcwallet. It makes HD transparent by providing the xpriv and xpub extended keys (the “master seed” in private and public key form) when first used, making it easy to audit these keys and the addresses they generate locally. It’s one of the simplest ways to support HD, and we show you exactly what you need to protect explicitly: the xpriv key. There’s no magic up our sleeve; with the xpriv you have full access to viewing and spending your funds. You can read more about HD mechanics, and bcwallet’s particular implementation, at the bcwallet FAQ Page or our HD Wallet API documentation.

Beyond the benefit of transparent HD support, bcwallet supports multiple currencies, has up-to-date fee estimation based on current network conditions, and is exceptionally easy to use…of course, it also places a strong onus on the user to securely maintain and use their “master seed.” But hey, that’s why it’s for developers.

And hey, we’re developers! Dogfooding is our forte, and we’d be remiss if we didn’t use our own wallet. We accept and store all customer bitcoin payments using bcwallet.

How to Use bcwallet in A GIF(fy)

First, install bcwallet using pip, then run bcwallet on the command line:

$ pip install bcwallet
$ bcwallet

Pictures are worth a thousand words, and by that logic, slow screencaptures are worth at least 15, 000 words a second.

Here we set up a new wallet on our internal testnet. bcwallet exits after generating a new extended private and public seed. We copy this seed, and load bcwallet with its newly created master seed. Note that in almost all real-world cases, putting sensitive master private keys in your bash history is a massive, world-ending no-no; for this toy example it’s fine, but in real life you should be much more careful. That’s why bcwallet also supports piping keys directly — to be extra cautious, you should pipe your encrypted key from GPG or OpenSSL.

Next, we check the wallet balance (0 bits, as suspected from a newly generated seed). We then generate a new receiving address. We copy this address, then zip to the next GIF.

Then we head back to the terminal to check the updated balance; 10, 000 bits, nice!

Finally, since we have the private seed locally loaded in this session, we can send all the funds back to our testnet faucet address. We use -1 to sweep all the value in this wallet, and select medium fee priority. Last but not least, we check the last transaction list and it shows a 0 bit balance and the 2 transaction hashes. q to quit, and that’s that!