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I suppose it's advisable to use a new key frequently for bitcoin receive address for anonymity. If each received amount goes to a new key, will my wallet size become unmanageable if I receive a number of small amounts per month ?

If yes, how can I consolidate all the coins split across 100s of keys in case my wallet is compromised and move it to a new wallet?

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It is foreseeable that the number of private keys that you must maintain may grow to an unmaintainable level.

The most common sense way to consolidate is to send your balance to a single address. This, however, effectively announces that all of those previously created addresses are linked to the same wallet.

If you really must maintain anonymity, then you could send the balance to a tumbler, and have that tumbler output different amounts to several different addresses you control. This, however, does have a cost, because tumblers are not free. Another alternative to a tumbler service is to send your balance to a web wallet that pools all bitcoin together (ledgering internally) and manually send different amounts to separate, new address. However, any time a balance exceeds one of those addresses' balances, it's likely that more than one will be used for the transaction, thereby linking them.

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  • If I don't care about staying anonymous, will consolidating require that I manually transfer all the amounts from each key to 1 consolidation key. Will that cost me a fee per transaction?
    – user
    Jan 28, 2014 at 18:26
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    No, your wallet is able to combine the balances together. Really, an address's balance is comprised of outputs, and a wallet's balance is comprised of address balances. Your client software can combine all of the outputs together and send them as a single output to a single address, meaning you can care about a single private key that corresponds to that receiving address. You may want to keep those other addresses' keys around, though, even if in cold storage, in case someone erroneously sends a transaction to one of them!
    – Colin Dean
    Jan 28, 2014 at 18:57

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