Watch-Only Wallet
A watch-only wallet is a Bitcoin wallet configured with public keys (typically an xpub) but no private keys. It can display balances, generate receiving addresses, and construct unsigned transactions, but cannot sign or spend bitcoin.
How It Works
A watch-only wallet imports your extended public key (xpub) from a hardware wallet. With this information, it can derive all your public keys and addresses, calculate your balance, and show your complete transaction history. It can also generate fresh receiving addresses for incoming payments. What it cannot do is sign transactions — that requires the private keys, which remain safely on your hardware wallet.
This setup is the standard workflow for hardware wallet users. Your day-to-day interaction happens on the software wallet (Sparrow, Bitcoin Core, Nunchuk, etc.) running on your computer or phone. When you want to spend, the watch-only wallet creates a PSBT (Partially Signed Bitcoin Transaction) that you transfer to your hardware wallet for signing. The signed transaction comes back to the software wallet for broadcast.
Watch-only wallets are also useful for monitoring cold storage without disturbing it. You can check your holdings from your phone anytime without needing to power on your hardware wallet or access your backup locations. Just remember that the xpub carries privacy implications — anyone with it can see all your addresses and balances. Keep your watch-only wallet on a trusted personal device.
Key Points
- Contains public keys only — can view balances and create transactions but cannot spend
- Standard companion to hardware wallets for daily monitoring and transaction construction
- Uses PSBT workflow for spending: construct on watch-only, sign on hardware wallet
- No risk of key theft even if the host device is compromised
- Xpub is still privacy-sensitive — treat the watch-only wallet device with care