Bitcoind Keypool Best Practices For Web App

Question

I'm creating a web application where many, many transactions will take place in a day. I have the bitcoin daemon running on a VPS and talking to my web app via JSON-RPC.

The users on my website will be generating many different addresses and sending many different bitcoins to these addresses (much more than the 100 keys by default in the keypool).

Should I simply set the keypool size to be something like 100,000 (or the max number of addresses generated per day) then perform a daily backup? Or what other method is the best when dealing with a very large amount of address generations?

Answer 1

Consider using hierarchical BIP32 wallets. You can generate the addresses with various tools (e.g. sx) or natively in your web app. Then you can import the keys to your bitcoind node in order to manage them. If needed, you can have multiple bitcoind nodes and load-balance the keys among them (e.g. having X customers per node).

The great advantage of BIP32 wallets is that you only need to perform the backup once - at the beginning, since all the keys are derived from the initial seed.