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InstaWallet is an online Bitcoin wallet service. When I visit it for the first time, it generates a Bitcoin address that I can use to deposit to.

I'm wondering whether that address is only ever used for my account, or whether all the coins that InstaWallet receive end up in a single large wallet.

  • If it's only ever used for my account, I should be able to use blockexplorer to monitor my balance. That's the case with MyWallet, since they don't even have access to the address' private key.
  • On the other hand, if everything goes into a single wallet, it's possible that other users' withdrawals may be paid with funds from my deposit address. That's what happens at MtGox and other exchanges.

So which is it?

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That address only receives deposits to your account. Otherwise, they'd have no idea what account to credit when funds wound up in that address.

But you can't use blockexplorer to monitor your balance, only to monitor the total amount of deposits you've made. InstaWallet will remove funds from that account as they wish to aggregate your funds with other deposits and service withdrawals.

Also, when you make a payment, even if InstaWallet uses your coins to make the payment, the "change" will be sent to a different address. For example, if you deposit 20 bitcoins and then withdraw 10, even if InstaWallet did use your 20 bitcoins to fund the withdrawal, the remaining 10 bitcoins would go to a different bitcoin address even though it's still in your InstaWallet account.

If, say, you're expecting someone to send you some Bitcoins, you could use blockexplorer to see if they've made that payment. But the balance you see won't really mean anything, it's just some number equal to or less than the total amount you've ever deposited through that address.

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  • By "only used for my account" I meant whether all activity on that address would be mine. It seems like you're saying that's not the case, and that coins at my address will be used to fund withdrawals made by other users. So I think the first sentence of your answer could be a little misleading. Good point about the change. I hadn't considered that. – Chris Moore Mar 30 '12 at 4:13
  • I agree. I'll clarify. – David Schwartz Mar 30 '12 at 4:13

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