The networked wallet uses the parent public key to derive child public keys, optionally helps distribute them, monitors for outputs spent to those public keys, creates unsigned transactions spending those outputs, and transfers the unsigned transactions to the signing-only wallet. When first run, the signing-only wallet creates a parent private key and transfers the corresponding parent public key to the networked wallet. In many cases, P2PKH or P2SH hashes will be distributed instead of public keys, with the actual public keys only being distributed when the outputs they control are spent. Note: we speak about distributing public keys generically. In the subsections below, we will describe common combinations of these parts. This leaves us with three necessary, but separable, parts of a wallet system: a public key distribution program, a signing program, and a networked program. However, the programs which distribute public keys or sign transactions don’t need to interact with the peer-to-peer network themselves. Wallet programs also need to interact with the peer-to-peer network to get information from the block chain and to broadcast new transactions. Two wallet programs can work together, one program distributing public keys in order to receive satoshis and another program signing transactions spending those satoshis. Permitting receiving and spending of satoshis is the only essential feature of wallet software-but a particular wallet program doesn’t need to do both things.

Blockchain wallet private key