Watch-only wallet

A watch-only wallet is loaded with public information only: a list of addresses or, more usefully, an extended public key (xpub) from an HD wallet. With an xpub it can derive every receiving and change address, show the full balance and transaction history, and generate fresh addresses for incoming payments. It has no private keys, so it can never sign.

It is the standard companion to cold storage. Bitcoin holders keep their hardware wallet in a drawer and use a watch-only setup in desktop software or a phone app to check balances and create receiving addresses. With PSBT, the watch-only wallet can even build an unsigned transaction, pass it to the signing device and broadcast the result. Businesses use the same idea to give accountants visibility without spending power.

Watching is not risk-free for privacy. An xpub reveals every past and future address of that account, so sharing it with a third-party server or app exposes the whole history. Running the watch-only wallet against your own node limits that leak. A compromised watch-only device can also show a fake receiving address.