Bitkey, the Bitcoin-only hardware wallet from Block, is rushing the rollout of a coin control feature due to strong demand from its users. The update will allow holders to label individual UTXOs and decide exactly which coins to spend in each transaction, a feature that has become key for privacy-focused Bitcoin enthusiasts.
Bitcoin is fundamentally different from traditional bank accounts. Instead of a single balance, wallets hold a collection of unspent transaction outputs, or UTXOs, akin to separate bills in a wallet. When spending, the wallet picks which UTXOs to use. Most solutions automate this, but automatic coin selection can accidentally combine outputs from distinct sources, creating a transparent trail of activity. For those valuing privacy or fee optimization, this is far from ideal.
With manual coin selection, users gain control over which UTXOs to spend or keep separate. They can also label specific outputs, helping track and organize coins better. This not only enhances privacy but also allows more efficient fee management by reducing transaction sizes and avoiding unnecessary overpayment.
Bitkey’s wallet operates with a 2-of-3 multisignature setup: the user holds two keys split between hardware and mobile, and Block retains the third. This model eliminates the use of seed phrases, marking a clear departure from standard hardware wallets. The wallet already supports a UTXO consolidation tool, letting users merge multiple coins into one. But community feedback on Reddit and app reviews pushed for further capabilities like freezing coins and full manual control features standard in wallets like Electrum and Sparrow.
This move reflects the growing demand for advanced privacy tools in self-custody platforms. Bitkey responding quickly to user needs highlights how vital nuanced coin management has become in the Bitcoin space.
This material is informational and should not be considered financial advice.
