Mastering Blockchain - Second Edition

Non-deterministic wallets

These wallets contain randomly generated private keys and are also called just a bunch of key wallets. The Bitcoin core client generates some keys when first started and generates keys as and when required. Managing a large number of keys is very difficult and an error-prone process can lead to theft and loss of coins. Moreover, there is a need to create regular backups of the keys and protect them appropriately, for example, by encrypting them in order to prevent theft or loss.