I wrote this for my Comox Valley circular economy ccommunity. I thought I would share it here also in case anyone else finds it useful for their communities.
(please feel free to correct any errors, I’m still learning too 🙂)
What a #bitcoin Wallet Really Does
A Bitcoin “wallet” isn’t where your coins live.
It’s a tool that creates and stores a huge random number called your private key.
A Bitcoin private key is just a random number between 1 and 2²⁵⁶ − 1 — so huge that no one could ever guess it. (Your private key is never stored on the blockchain, it only exists where you keep it.)
For example, you could create your own private key manually by creating a large random number, the problem with this is humans are bad at true randomness. But for example sake let’s say we created a wallet by rolling a die many times.
How many rolls would we need?
That number needs 256 bits of entropy:
• A fair 6-sided die gives about log₂(6) ≈ 2.585 bits per roll
• 256 ÷ 2.585 ≈ 99 rolls for a secure private key
Then:
Convert from base-6 to hexadecimal — that’s your private key.
From there, you can also use the BIP39 standard to turn that randomness into a 12-word seed phrase for easier backup and recovery. This is just a human-friendly way of storing the same private key.
How random is it?
A 256-bit number is so large that if every computer on Earth guessed keys non-stop for the lifetime of the universe, they’d still be nowhere close.
It’s like trying to guess a single grain of sand… somewhere in all the beaches, deserts, and oceans of the planet… not just Earth, but trillions of Earths.
There are more possible Bitcoin private keys than atoms in the entire observable universe!
Bitcoin security is all about keeping that one number secret!
Why Signing Devices Exist
In the early days, Bitcoin software was all-in-one: it generated your private key, your public key, and your address, stored them, scanned the blockchain, and let you send and receive Bitcoin — all from one program.
But generating private keys on an internet-connected machine came with serious risks.
So over time, things got decoupled:
• Software wallets: run online to see your balances, make addresses, and prepare transactions — but don’t store private keys.
• Signing devices (formerly “hardware wallets”): kept offline or airgapped, holding your private key safely and signing transactions without ever exposing the key.
Today, most Bitcoin transactions are made like this:
1️⃣ Your software wallet creates an unsigned transaction.
2️⃣ You send it to your signing device.
3️⃣ The signing device uses your private key to sign it (offline).
4️⃣ You send the signed transaction back to the software wallet to broadcast.
I hope this helped 🙂
Remember, you can always reach out if you need help or have any questions.
-Joyce
