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I read this paragraph from bitcoin.it but I don't get it completely.

The wallet contains a pool of queued keys. By default there are 100 keys in the key pool. The size of the pool is configurable using the "-keypool" command line argument. When you need an address for whatever reason (send, “new address”, generation, etc.), the key is not actually generated freshly, but taken from this pool. A brand new address is generated to fill the pool back to 100. So when a backup is first created, it has all of your old keys plus 100 unused keys. After sending a transaction, it has 99 unused keys. After a total of 100 new-key actions, you will start using keys that are not in your backup. Since the backup does not have the private keys necessary for authorizing spends of these coins, restoring from the old backup will cause you to lose Bitcoins.

Can someone explain this in a clear way, especially the bold parts?


Note: Since Bitcoin Core uses deterministic wallets (BIP32) now, this behavior does not apply to new wallets created with Bitcoin Core versions 0.13.0 and newer. It does apply to old wallets created with previous versions that were carried over to the new versions of Bitcoin Core!

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When you do certain actions (usually a send), a new key is generated. Your backup pre-generates 100 of these keys. Once you need more than 100 keys generated, your backup no longer knows about the new keys. This means you should perform backups regularly, at least every 100 transactions.

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You don't care about transactions (these are stored online) You just have to care about your private keys for your addresses, that is the only important information stored in the wallet.

The piece of documentation you referenced speaks about a feature in bitcoin client, which generates 100 keys in advance, thus adding a new address takes the key from the stock. If your wallet is destroyed but you have a backup of the wallet, and you have some money on some addresses, which have been added to your wallet later than the time of creation of the backup, you'll be still able recover these money. That is the point of the feature.

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