Step 6 / The Bitcoin Machine
Your wallet holds access, not coin files.
Maya’s phone breaks. The payment record still exists, but can she spend again?
Maya drops her phone, and it will not turn on. Her wallet app was on that phone. She is worried that her bitcoin disappeared with it.
The network’s payment history has not gone away. What Maya needs to recover is the ability to approve a payment. Seeing that the money exists and being able to spend it are different things.
The wallet shows the record and helps you use it
Maya wants to send a friend 50,000 satoshis. A satoshi, or sat, is a small unit of bitcoin: one bitcoin contains 100 million sats. Her wallet shows enough for the payment. It is reading amounts in the network’s records, not counting coin files inside her phone.
The wallet helps Maya read those records and prepare a payment. If Maya controls her own spending keys, the wallet may hold them. Or it may work with a separate device that holds them. Controlling those keys yourself is called self-custody.
A private key is a secret number used to make a digital signature. Other computers can check the signature with public information. They do not need Maya’s secret number to do that.
A wallet can also have only the public information needed to follow the record. It can show the balance without holding the keys needed to spend. This is called a watch-only wallet. A balance on a screen is not proof that the app can approve a payment.
The key makes a signature. Only the signed instruction needs to travel.
The message travels; the secret stays
Maya’s friend gives her a receiving address. That address tells the wallet how to set up the new payment’s spending conditions: the rules that must be met to spend it later. The address can be shared so someone can pay it.
Maya checks the payment, and her private key makes a signature over the relevant payment data. Other computers use public information to check that signature. The secret used to make it stays with her signer.
The signature shows that the required key approved the data. It does not show that Maya understood a misleading screen. And it does not show that a miner has already included the payment in a block.
Spending control is also different from rightful ownership. Someone who steals a key may be able to approve a payment. That ability does not make them the rightful owner of the money.
Recover the keys, not files shaped like coins
The broken phone did not erase the payment history. Maya needs a way to rebuild her spending access on another device.
Many wallets give the owner a set of recovery words. A compatible wallet can use those words to recreate starting data called a seed. It then uses the seed to produce the required keys.
The words may not be the whole setup. Maya may also need an extra passphrase and the correct wallet settings. She must use a recovery method that matches how her wallet was created.
Reinstalling an app alone does not recreate the keys. A receiving address or a screenshot of the balance is not enough either. If no usable keys or recovery method remain, the ability to spend may be lost.
An account held through a company may have a different recovery process run by that company. Who controls the keys affects who can help restore access. We will examine those choices more closely in Protect your money.
A broken phone does not erase the network’s history. Recovery depends on the backup.
Treat the recovery material like the spending secret it can rebuild. Follow verified instructions from the wallet and use a compatible setup. Do not enter it into an unexpected website or give it to someone claiming to be support. Later, we will turn this into a protection routine.
Look beyond the login screen
Not every wallet shows recovery words. Some use a passkey to approve access. Others split key material among parties, involve recovery contacts, or use rules in a smart contract. A familiar login screen does not tell you who can spend.
Ask who can approve a payment and who can restore access. Can a provider act alone? Can the owner keep access if the provider stops working? A wallet’s actual design must answer those questions.
Remember the watch-only wallet. It can show money without being able to spend it. An address or a screenshot cannot replace the recovery material required by the real wallet.
Bitcoin’s payment history is public. An address does not automatically show a person’s name, but a purchase, exchange account, or public post can connect that address to them. Sharing an address lets someone pay Maya without receiving her spending key. It can still reveal information about her activity.
The idea to keep
After a lost phone, ask what record still exists and how spending access can be restored. A new app screen is not a replacement for the keys or the right recovery setup.
Next, compare a company controlling the keys with controlling them yourself. Each arrangement gives someone particular powers and responsibilities.