Bitcoin wallets- question about control and centralization

Question

Community,

Just a quick simple question very important for me to understand about the security of wallet types.

• Are there bitcoin wallets which can shut down and block/freeze/control your bitcoin transactions in any way shape or form? I know that direct stealing of coins is not possible (at least not with any "decent" wallet). But what I like to know is if there are wallets or an entire "category" of wallet types, which could "interfer" or "block" transfers/transactions. Not stealing but just blocking. Could you please for example name one or two so that I can do more research on such wallets?

• Can you reference some wallets which, from technical standpoint, have guaranteed not any (given any circumstances) way to "block" your btc transactions?

Basically I want to know what wallet (types) to use so that the wallet provider can never block my transactions. I know that the bitcoin core wallet/main btc software would solve my question. But please disregard this, I like to ignore the option of running own btc node/btc software.

Thank you

Answer 1

Largely, this question boils down to one thing: does the wallet software let you control the private keys for your coins? Or not?

If the wallet does not let you control your own keys (ie a custodial wallet), then it is up to the custodian to craft and publish your transactions. Obviously, this gives the custodian ability to censor your transactions at will.

If the wallet does let you control your private keys, then you have the material needed to craft a transaction (the key itself). Perhaps a developer could code a wallet that refuses to broadcast some certain type of transaction, but if you own your own keys, then you are free to import those keys to some other wallet software, and create the transaction as per normal. Only by withholding your keys, could a wallet truly censor your ability to publish a transaction to the network.

The only way to 100% verify that a developer has not created a malicious wallet is to review the source code yourself, and then build the wallet from it. This is obviously very intensive, and so perhaps the next best thing to do is to use well-known and well-reviewed open source software.

If some software was found to be censoring transactions, then I would expect that the Bitcoin community would make this known, and that software would no longer be recommended for use.