Beginners who are new to this space are often advised to be cautious when it comes to investing in Bitcoin and Cryptocurrencies. There are several advantages of this technology but the market is volatile and is highly risky so do not invest more that you can’t afford to lose. But apart from investing newcomers tend to lose a lot just because they don’t have much knowledge on how to use or secure Bitcoin. There are several ways to lose your Bitcoins and since this technology is decentralized there is nobody that can help you with your funds. Only you are the master of your money. So before investing your hard earned money take some proper measures, do some research and be careful on how they are stored.
Sending to wrong wallet address or losing private keys is the biggest mistake crypto newcomers make. Also we’ve seen users sending Bitcoin to watch-only wallet address for which they don’t have the private key. Then they seek for help on forums asking questions such as: How do I transfer my balance from watch only wallet to another address? How to get private keys for my watch only address? I can’t spend Bitcoin from my watch only wallet and similar things.
This is one common issue users of blockchain wallet (blockchain.com) face and what you must remember is even blockchain support team can’t help with such situations as they don’t have your private keys or access to your account. So what does watch-only wallet mean, how it works and what you need to know before you create a watch-only wallet.
What does watch-only wallet mean?
A watch-only wallet, as the name suggests it is just a Bitcoin wallet that is used for watching only. A watch only address doesn’t have private keys and you’ll not be able to spend any Bitcoins associated with that address. It is used only to view the balance and monitor the transaction activity of a particular wallet address.
But I can see the balance and transaction details of any wallet address using block explorers. So what is the use of watch-only wallets? Sure, you can, but instead of individually monitory each Bitcoin address you can import all address and monitor them all conveniently at one place. A watch only wallet acts like a cold storage wallet and it helps to view balance and keep track of your transactions without any risk. You can import your address for which you own private keys or any public Bitcoin address (for example: this address) into your watch-only wallet and start monitoring all of its incoming and outgoing transactions. Let’s see how it’s done.
Creating watch-only BTC address
We can import any Bitcoin address to core QT wallet. But the process is bit complicated and moreover you need to run full node and you need to re-scan the blockchain. It takes a lot of time and is not worth it. So instead of core wallet there are several third party wallets that supports watch-only feature.
To name some: Armory wallet, Blockchain wallet (blockchain.com), Bit wallet, Electrum wallet, Samourai wallet, Block keeper and Mycelium. Some of these even has support for Ethereum, Litecoin and Dash. But here we’ll only cover the two most popular wallet: Bitcoin electrum and Blockchain wallet which is available for both Android as well as IOS.
Blockchain watch-only wallet
Blockchain.com (previously Blockchain.info) is a blockchain explorer service and a online cryptocurrency wallet provider. Using this service you can quickly create a BTC wallet. If you are an account holder already then login to your wallet and go to settings >> wallets & addresses where you’ll find two sections namely “Bitcoin Wallets” & “Imported Bitcoin Addresses”. To add a new watch only address click on Import Bitcoin address and choose “Existing address generated outside this wallet”. Remember that address generated outside of your blockchain wallet does not have private keys until unless you import them.
Once you’ve entered the public address, click on import to create a watch only address within your wallet. Now head to your dashboard and it will display all transactions associated with that address.
Previously users of this wallet tend to mess up and accidentally send coins to wallet which they do not control. Due to this reason blockchain wallet service labeled these addresses as Non-Spendable instead of watch-only. Also the balance of these addresses are no longer included with total balance.
Electrum wallet watch only
Creating a watch only wallet is very simple in Electrum. For more information read this guide on importing private keys to electrum. But instead of private keys you need to import the list of public keys. Once imported it will display a warning message reminding you that this wallet is watching-only and you’ll not be able to spend Bitcoins with it.
So how to spend or transfer Bitcoin from watch only wallet? Simple answer: You need the private keys of the watch only address.
How to withdraw Bitcoin from watch-only address?
As we said watch only wallets are used only to monitor activity of a particular Bitcoin address. Anybody can create such address and anybody can view the balance of any existing Bitcoin address even if it is not their own. It is because of the open network and all information on the blockchain can be openly seen by everyone. Nobody can spend coins from watch only address except for one that own private keys. So always be cautious on to which address you send money. If you are sending Bitcoin to watch only address then first ensure if you own private keys for that particular address. Without wallet private keys you will be unable to sign a transaction. Hence you’ll not be able to send any Bitcoins.
For example consider the watch only address as your bank account address. You can give the account details to anybody and any one can send money to your account number but they cannot withdraw your funds. Because you own all the private information for that account. For Bank its PIN number and in Bitcoin its private keys.
Whichever wallet it is Paper wallet, core wallet or electrum wallet. Whenever you generate a new wallet address a private key is also generated along with it. If you find a watch only address in your wallet then you are the one who imported it. So you must first find out the private keys of that address. For electrum wallet read this guide and for core wallet read this to know how to export private keys. Once you have the private keys you can import them to your wallet and spend its funds.
This guide is not about watch only wallet but to show you the importance of your private keys. What you must remember is if you don’t own the private keys you don’t own the funds. So keep your keys safe and whenever you create a watch only wallet remember to back your original wallet because watch-only wallets don’t have access to private keys. One last thing: Do not provide your private keys to anyone and do not import them to any online service (Including blockchain.com). Once you expose the private keys your wallet security will get compromised.