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What is a watch-only wallet?
A watch-only wallet shows balances and transactions for addresses without holding the private keys, so it cannot spend. It is set up from an address or an extended public key (xpub), often to follow funds kept in cold storage.
What it means for you
It cannot move your funds, but an extended public key reveals every address and payment in that account, so sharing it gives away your full history. To spend, a transaction made in it still has to be signed by the device holding the keys.
How it works
A watch-only wallet is loaded with addresses or an extended public key (xpub): a public key plus the 32-byte chain code from BIP-32. From an xpub it can compute every non-hardened child public key, and so every address in that account, and follow their history, but it holds no private keys and cannot sign. It can draft unsigned transactions for an offline device to sign. BIP-32 adds a caution: an xpub together with any one non-hardened child private key is equivalent to the parent private key.
Sources: Electrum documentation: Cold storage, BIP-32: Hierarchical deterministic wallets · checked 4 October 2026
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