In Bitcoin, wallets don’t really retailer cash. Wallets maintain non-public key materials that allows the consumer to spend particular Unspent Transaction Outputs (UTXOs) which are tracked on the blockchain.
{Hardware} signing units typically don’t have the potential to course of the blockchain. Subsequently they can not by themselves study which UTXOs are owned by the consumer. That is the place the software program pockets comes into play: The software program pockets retains observe of a “watch-only” pockets and subsequently learns in regards to the UTXOs and transactions related to the consumer. This data is used to create transactions. The {hardware} signing machine solely retains observe of the non-public key materials and can present signatures for the transaction created by the software program pockets. To that finish, the transaction must be introduced in a selected format to the {hardware} signer’s interface. This translation layer is often applied in some software program wallets.
The keys don’t want to go away the {hardware} signing machine. Moderately the partially signed (or unsigned) transaction is transferred to the {hardware} signing machine, the {hardware} signing machine provides the related signatures, and the signed transaction is returned from the {hardware} signing machine to the software program pockets. There are numerous methods to get the transaction knowledge to the {hardware} signing machine, the best is to plug it into the pc with the software program pockets, however some {hardware} signers e.g. learn animated QR codes, or some customers create the transaction on the net machine and use a separate airgapped offline machine to hook up with the {hardware} signing machine.
