As of today, one problem shared across the majority of Bitcoin wallets, is that of separating and managing your funds in a simple, intuitive and immediate fashion.
Writing down different mnemonic pass-phrases, making various backups of wallet files, or worse, managing various kinds of wallets reusing keys over and over is now an unnecessary burden as with deterministic wallets you can construct any number of separates accounts from one initial seed or pass phrase.
GreenAddress, one of the most advanced Bitcoin wallet in the market, has resolved this issue by integrating in the API first and then in its wallets the ability for users to create and separate their funds in any number of accounts all part of their wallet.
A subaccount is an actual wallet parallel to the main one and controlled by the same user. It’s possible to create this kind of sub-accounts under one’s wallet, in this way enhancing both privacy and organization in bitcoin’s management, all in complete compliance with the BIP32 specification.
Subaccount are indeed all mathematically determined from the same mnemonic phrase. And while for GreenAddress this means implementing various Bitcoin Improvement Proposal (BIPs), on the user side it means better usability and better privacy, without compromising security. The whole multi-signature architecture implemented by GreenAddress is unchanged: the wallet provider cannot “disappear” with the funds and no malicious attacker can take control of it without explicit authorization, including two factor authentication.
The great advantage of using deterministic accounts is crystal clear in the previous screenshot: it’s possible to separate funds based on use, this way avoiding confusions, and thus manage all transactions and accounts without the need to continuously log in and out, or to copy and pastes mnemonics, or still worse: to backup wallet files with the risk of overwriting and lose access to the funds.
A subaccount will never mix the funds it contains with another
subaccount: we are talking about separated and independent “sub” wallets, each one derived from mathematical algorithms with different variables and each one with an exclusive set of Bitcoin address for sending, receiving for all purposes. The access to all these subaccount, anyway, is granted by the same mnemonic key (or the same Bitcoin hardware wallet).
To view an account other than the main one, to check on incoming and outcoming payments, or to check the transactions list, is simple: it’s possible to pick your subaccount (if any) from a dropdown.
Subaccounts are a consequence of Bitcoins’ growing adoption: with more and more people accepting it as a payment system, it naturally rises the need for more advanced kinds of control on funds.