A Bitcoin wallet address is a digital address, made up of letters and numbers, that you use for sending and receiving Bitcoin transactions. In just the same way that an email address is used to send and receive emails, a Bitcoin wallet address is the digital address from which you send and receive BTC. Jun 07, · A bitcoin address is one of the key concepts that make the currency and the blockchain work. A bitcoin address is nearly identical to an email address. It might be easier to learn about two other terms to fully understand the address: the private key and the public key. A bitcoin wallet address is a hashed version of your public key. Every public key is bits long — sorry, this is mathematical stuff — and the final hash (your wallet address) is bits long. The public key is used to ensure you are the owner of an address that can receive funds.
Bitcoin public key wallet addressBitcoin Wallet Address: Understanding BTC Wallet vs Address
Crypto Guides. Cryptocurrency Basics What is Bitcoin? What is blockchain? What is mining? Where are your coins stored? Where can you spend your Bitcoin?
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The software needs a random number input. The software generally also does this automatically, or will require the user to generate some form of randomness, for example by moving their mouse over the screen for a period of time. From the public key, your wallet address will be generated. Note: The amazing thing about the algorithmic generation of the wallet address from the private key is that generating the public key and wallet address is easy, but doing the reverse calculation from wallet address to private key is effectively impossible!
This is what secures the funds in your wallet address. Your wallet is all set up — ese your new wallet address to send and receive coins!
How does a transaction work? She signs her message transaction with her private key, resulting in an encrypted transaction. The code that this results in is known as the transaction hash. The tx hash is sent to the network for verification. If Alice DOES have enough money in her wallet address, her transaction will be mined and included in one of the next blocks on the blockchain.
Important to remember Your wallet address can be shared publicly to anyone who wants to send you funds — in fact they need this address to be able to send the money. Keep your private key secret, never ever share with anyone!!! Backup your private key, perhaps in several secure locations.
If you lose it, the funds on that wallet address are unrecoverable and your money is gone forever. This is the case with coins kept on exchanges: the exchange controls the private keys of those wallets. This is one reason why it is recommended that you do not store large amounts of money on an exchange. However, a Bitcoin wallet address is widely considered to be the better choice. Addresses have two major benefits over public keys. First, addresses are created using hashing algorithms , which adds an extra layer of encryption for enhanced security.
Second, addresses are much shorter and easier to manage than public keys. In other words, they offer a smoother user experience. Bitcoin wallet addresses function like email addresses in the sense that both can be used to provide a means of secure communications.
The main difference is email addresses are used to determine where to send text or files, while Bitcoin wallet addresses are used to determine where to send BTC transactions. When sending BTC or any other cryptocurrency , always make sure to use the correct wallet address. Whenever BTC is sent to the wrong address, there is no solution that enables the sender to recover funds. If you send BTC to the wrong address, those coins are almost certainly gone forever.
Bitcoin public keys and addresses are presented in various formats. Here are a few examples. Note: These examples are listed for educational purposes only. As mentioned earlier, private keys are generated together with public keys and addresses as part of private-public key pairs. Bitcoin private keys are a very important part of keeping BTC secure on the Bitcoin network. Each Bitcoin private key is essentially a very secure passcode that is used to unlock and spend BTC belonging to a specific public key and wallet address.
This means that Bitcoin private keys should always be kept secret. If someone has access to your private key, they could easily steal your BTC. Just like Bitcoin wallet address formats, Bitcoin private keys come in a variety of formats. Here is an example of a private key in hexadecimal format. The only way to spend funds on the Bitcoin network is through the use of a private key. In regards to private key management, there are two main types of wallets: custodial wallets and non-custodial wallets.
Coinbase, Kraken, and Gemini are examples of custodial wallet providers. With custodial wallets, a custodian the wallet provider keeps private keys secure on behalf of wallet owners. Custodial wallets never require users to hold their private keys. If you forget your wallet password, regaining access to funds is quite easy. You would just go through the typical password reset steps via an email account as you would for most other online accounts.
However, there are potential security risks involved with trusting someone else to manage your private keys. This could lead to the theft of funds. With non-custodial wallets, wallet providers never store private keys. The user is responsible for keeping their own private keys secure. You sometimes have the option to export a private key usually in WIF format and use it to access a non-custodial wallet.
However, wallet providers widely recommended to avoid using a private key directly as a means of accessing a non-custodial wallet. Note that a few types of non-custodial wallets e. While non-custodial wallets generally provide more security than custodial wallets, the process of recovering access to funds may be a bit more difficult if you forget your password.
So what happens if you somehow forget your password to a non-custodial wallet? Instead of being able to reset your password via an email account, you will need to use a seed phrase in order to regain access to your funds. Sometimes called a mnemonic phrase, a seed phrase is a list of random and unique words usually 12 or 24 words that is generated whenever you create a non-custodial wallet.
You should write down the seed phrase and store this information in a secure place. Just like private keys, seed phrases should always be kept secret. Assuming that no one else gains access to your private key or seed phrase, you should be able to use your seed phrase to recover funds. Usually, the recovery process asks for certain words in the seed phrase.
For example, during the recovery process, you may be prompted to enter the 2nd, 3rd, 7th 10th, and 12th words in the seed phrase or another combination through your selected Bitcoin wallet software. Bitcoin wallets are often compared to key rings.
If you want to generate a new Bitcoin wallet address, you can easily do so within any existing wallet. Although BTC is technically stored and transferred via unspent transaction outputs UTXOs , a Bitcoin wallet provides an easy-to-use interface for managing addresses and BTC belonging to those addresses. For example, if you want to send or receive BTC, you will likely want to use some sort of Bitcoin wallet.
Bitcoin wallets are accessible through a variety of formats, including computers, web browsers, hardware devices, and mobile devices. Knowing this information will enable you to avoid making common mistakes. As discussed above, email addresses and BTC addresses function quite similarly.
With an email account, no one other than the account owner and possibly the email provider can see incoming data sent to a specific account. In contrast, BTC transactions are publicly broadcast on the Bitcoin blockchain network, meaning data is transparent. Once you send out your Bitcoin wallet address to someone, that person can use a blockchain explorer website such as BTC. They can also know how much BTC belongs to your Bitcoin wallet address in real-time.
For example, Bob should ideally have one Bitcoin wallet address for transactions between him and Alice and a separate Bitcoin wallet address for transactions between him and Chris. On the security side, vulnerabilities due to flaws in the design of Bitcoin digital signatures have made it possible to calculate the corresponding private key.