To get started with Bitcoins, you need to understand the basics, particularly the concept of a Bitcoin address. In this beginner’s guide, our foremost Bitcoin connoisseur Alex explains what a Bitcoin address is, how it works, how to get and create a Bitcoin address to receive, send and store Bitcoins safely. Enjoy reading!
What is a Bitcoin Address?
A Bitcoin address, public address, or just an address is a unique identifier that serves as the place where Bitcoins can be sent. It is also sometimes called a receiving address and represents the source and destination of a Bitcoin payment. In simple terms, a Bitcoin address is a public identifier for your Bitcoin wallet, acting as a virtual location where the cryptocurrency can be sent.
Each bitcoin address is unique. It consists of 26-35 alphanumeric characters, and the address usually starts with the number 1 or 3. The address can contain all alphanumeric characters of the Latin alphabet except 0, O, I (i large), and l (L small). Test network addresses usually start with m or n.
Just as with email, you can send an email knowing the recipient’s address; you can also send BTC to someone by sending them to the appropriate Bitcoin address. Only unlike email, one person can, and is encouraged to, have an unlimited number of separate Bitcoin addresses. It is recommended to use a unique address for each transaction if you want to achieve greater anonymity of payments.
How Bitcoin Address Works?
Addresses are entered accurately and case-sensitive. If it is entered incorrectly, then funds will not be sent to the correct account, i.e., will be lost, or the transaction can be rejected if the address does not match the rules. Some of the characters within a Bitcoin address are used as checksum so that typos can be automatically detected and rejected. Addresses have two major advantages:
- Addresses are created using hashing algorithms that add an extra layer of encryption to increase security. As a result, there is virtually no chance that anyone other than the owner of a particular address will be able to spend funds belonging to that address.
- Addresses are much shorter and easier to manage and offer a more straightforward user interface. BTC wallet addresses are used to identify the recipient of a BTC transaction.
When using websites that accept Bitcoin or hold your BTC savings, don’t be surprised that the site will create temporary Bitcoin addresses for transfers. Temporary addresses may change with each new transaction, but the old addresses usually remain operational.
Bitcoin Address Collision
Since Bitcoin addresses are based on random numbers, it is possible, though doubtful, to generate duplicate addresses independently. This is called a collision. If this happens, then both owners of that address can spend the money sent to that address. But here, the second owner of the address can’t spend all the capital of the first actual owner (or vice versa).
If you deliberately decided to pick an address that would cause a collision, it would take you 2^107 times as long to generate that address as it would create a new block. As long as signatures and hashing algorithms remain cryptographically strong, and they probably always will be, it will be more profitable to generate and receive commissions for transfers than to look for duplicate addresses.
How to Get a Bitcoin Address?
There are three main methods of getting a bitcoin address, let’s look at them all in more detail.
Download a Mobile Wallet
Most cryptocurrency mobile wallets can store a wide range of cryptocurrencies in one place and can be used on both Android and iOS devices. It’s worth paying attention to reviews to choose the most reliable one. Once you select the right mobile wallet, you can create your Bitcoin wallet in the app. This usually involves creating a unique security PIN to control access to the wallet.
Use a Hardware Wallet
Hardware wallets are physical vaults that allow users to store cryptocurrency in a self-contained environment and are protected by several hardware and software layers of security. They are protected against a wide range of attacks but can be expensive. Hardware wallets allow users to generate addresses for a wide range of cryptocurrencies, but most offerings support Bitcoin, Ethereum, and Tether.
Cryptocurrency Exchange Registration
You need to register with the exchange of your choice and meet all of the verification requirements. After enabling the wallet function, you will now find or generate a deposit address on your account. Most cryptocurrency exchanges do not allow users to create multiple addresses for a single cryptocurrency, forcing them to reuse the same address for each transaction.
While most cryptocurrency exchanges provide users with a crypto wallet, it is essential to note that not all exchanges are reliable. Therefore, it is necessary to do your research before choosing an exchange, being wary of not using platforms that do not have a good reputation and reviews.
How to Create a Bitcoin Address?
There are many ways to get a bitcoin address. Here we will show you the easiest and safest way.
- The public key is taken (65 bytes, 1 byte 0x04, 32 bytes correspond to the X coordinate, 32 bytes correspond to the Y coordinate).
- SHA-256 hashing of the public key is performed.
- Performs RIPEMD-160 hashing of the SHA-256 result.
- A network identifier byte is added before the RIPEMD-160 hash (0x00 for the leading network).
- Performs SHA-256 hashing on the extended result from RIPEMD-160.
- Performs SHA-256 hashing on the previous SHA-256 hash; the result will be a checksum.
- The first 4 bytes of the resulting hash are taken.
- These 4 bytes of the checksum from step 7 are added to the end of the extended RIPEMD-160 hash from step 4. This is the 25-byte binary Bitcoin address.
- The result of item 8 is converted to a base58 string. This is the most commonly used bitcoin address format.
How to Secure a Bitcoin Address
When it comes to securing your coins or actual address, the only thing you need to guarantee is the security of the private keys of the corresponding BTC address. Anyone who has access to your personal keys will be able to access your address and steal coins from it. So make sure that no one but you can access your private keys.
Keep your wallets encrypted and back them up regularly. Learn how to back up your e-wallet. Also, learn how to back up and restore your main Bitcoin wallet. This is a crucial step because Bitcoin transactions are irreversible. When they are sent to the wrong address, you cannot get them back, so you have to be very careful when making transactions with any cryptocurrency.
It has been more than ten years since Bitcoin was created. Since then, much has changed in blockchain technology and the cryptocurrency ecosystem. Incredible developments and more exciting innovations are emerging in this space.
But has society embraced these technologies? Every year a lot of new people hope to get started with cryptocurrencies. But many users find it difficult to understand what it is and how it works.
Artex Global is here to help. On our website, you will find tons of material about blockchain and cryptocurrencies in particular. We publish information about cryptocurrency exchanges as well as their comparisons, for example, Gate.io cryptocurrency exchange. Our multi-country guides, for example, the best Canada cryptocurrency exchanges, will help you understand how and where to start your introduction to cryptocurrencies.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
I want this market to be more understandable for everyone.