Tuesday, August 20, 2019

What are Bitcoin Addresses?

At one time or the other, you may have tried sending or receiving Bitcoin payments. Whichever is the case, a Bitcoin wallet address was involved. But what exactly are they and why do you need it in the first place? Here’s a guide that answers your question as to what Bitcoin addresses are.

What are Bitcoin Wallet Addresses?

A Bitcoin address is a set of alphanumeric (uppercase and lowercase) string which no one has really taken time to read. Here’s what it looks like:

158TpTdVTR9YjvbhM1ya2punzWy2XeX66Q

And that’s how confusing they are; a bunch of randomly generated 25 – 36 digits which no one needs to memorize. However, they are used to locate a virtual record on the blockchain. (Want to know more about the blockchain? check out this guide).

Let’s bring it home:

The closest shop next to you is accepting Bitcoin for pizza. And you’re like, hey! I’ll like to exchange my Bitcoin for food. But how do you think your funds will be credited to the wallet of your seller? It’s with a Bitcoin address!

The address uniquely identifies the record on blockchain owned by your seller. As such, there is no mistake as to who the funds are meant for. That being the case, people can send Bitcoin to you using your wallet address and you can also send it to them using a unique identifier of their wallet.

Format of Bitcoin Addresses

A Bitcoin address can begin with the number 1 or 3. Currently, these addresses are of three formats and they are:

  1. Pay-to-PubkeyHash (P2PKH) format which begins with1, eg: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.
  2. Pay to script hash (P2SH) format which begins with 3, eg: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.
  3. Bech32 bc1 addresses which begins withbc1, eg: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq.

Bitcoin addresses are case sensitive and should always be copied instead of typed. Nonetheless, the wallet itself can detect a wrongly inputted address even though not in all cases. Reportedly, the probability of getting a wrong address correct is 1 in 4.29 billion.

Related Article:  How to Check Bitcoin Transactions on the Blockchain

Bitcoin Addresses Can be Changed

A Bitcoin address is also known as a public address since it is not expected to be hidden like a private key. The address can be generated severally from a Bitcoin wallet and it’ll still point to the same wallet. Consequently, these are not permanent addresses since they can be changed.

Now, keep in mind that addresses are not always represented as numbers, they can also be embedded in a QR code. On scanning the code with a camera, it automatically generates the address of the recipient. Some online platforms that accept Bitcoin have also incorporated how much is to be paid for a product in the QR code which takes away the need to manually input the amount to be sent.

How to Generate a Bitcoin Address

You can generate a Bitcoin address to start receiving payments on a cryptocurrency exchange, mobile wallet, or even a paper wallet.

Let’s take a mobile wallet such as Blockchain, for instance, you can generate an address by:

  • Download the wallet from the official site itself (blockchain.info)
  • Signup on the wallet
  • Setup your four unique security key
  • Click on the ‘Receive’ button
  • Copy the address that is generated

Instead of logging in each time, you can just swipe from the app’s home screen to generate an address. Yes, the funds will be credited to your wallet.

It’s as simple as that!

Also, check out these guides on how to generate a Bitcoin address on a cryptocurrency exchange and paper wallet.

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