You know that your Bitcoin Address is what you share to the world to get paid.
You probably know that your wallet software uses a private key to spend the money you received on this address.
The keys are not stored on the network and they can be generated without access to the Internet.
From the private key, we use a one-way cryptographic function, to generate a public key.
There are two Bitcoin networks:
- TestNet is a Bitcoin network for development purposes. Bitcoins on this network are worth nothing.
- MainNet is the Bitcoin network everybody uses.
You can acquire testnet coins quickly by using faucets, just google “get testnet bitcoins”.
You can easily get your bitcoin address from your public key and the network on which this address should be used.
Practicing Bitcoin Programming on MainNet makes mistakes more memorable.
Like the good ol’ days
You may be wondering why generate several keys? The main reason is privacy. Since you can see the balance of all addresses, it is better to use a new address for each transaction.
The problem with this is, all backups of your wallet will become outdated when you generate a new key.
Deterministic Wallets (BIP 32)
A “Deterministic” wallet would fix our backup problem. With such a wallet, you would have to save only the seed.
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From this seed, you can generate the same series of private keys over and over. This is what the “Deterministic” stands for. From a master key, I can generate new keys.
What is an xpub?
The trick is that you can “neuter” your master key, then you have a public (without private key) version of the master key. From this neutered version, a third party can generate your public keys without knowing your private keys.
Your neutered master private key is your master public key, also called extended public key or xpub.