By Nick Marshall
If you want to spend or receive Bitcoin, you’ll need a Bitcoin address. These provide a gateway to the
31 million Bitcoin wallets are currently in use, as well as enable secure payments to any vendor who accepts the world’s pioneering cryptocurrency. How do you get a Bitcoin address and how does the system work? Here’s everything you need to know.
What Is a Bitcoin Address?
If you send or receive digital cash payments, either through your bank or via a mobile app, you’ll be familiar with IBANs, Swift/BIC codes and the other numbers that financial institutions need to route wire transfers from one account to another. When it comes to cryptocurrency and Bitcoin, the equivalent is the Bitcoin address. It’s a unique, virtual alphanumeric identifier that routes Bitcoin assets from one exchange or wallet to another. Unlike the IBAN for your bank account, however, it’s a single transaction token, not a permanent number linked to your wallet. Note too that you don’t store a balance at Bitcoin address level. Instead, your crypto assets are stored at the wallet level.
What Does a Bitcoin Address Look Like?
In the spirit of blockchain, the Bitcoin address is the public half of an asymmetric key pair. The other half, the private key, is stored within the wallet and secured behind your password. Bitcoin addresses can have from 26 to 35 alphanumeric characters.
- Those starting with a ‘1’ are P2PKH or “pay to public key hash” addresses, which locks bitcoin to the hash of a public key. These were the original format when Bitcoin launched in 2009, but are the most expensive format to authenticate.
- Those starting with ‘3’ are P2SH or “pay to script hash” addresses, which allows for the spending of bitcoin based on the satisfaction of the script whose hash is specified within the transaction.
- Those that begin with ‘bc1’ are “Bech32” addresses. Most Bitcoin wallets now default to this format.
Why Do You Need a Bitcoin Address?
In the early days of Bitcoin, you could send and receive payments using an IP address. Clearly, this exposed transactions to hackers and those intent on seizing crypto assets. By upgrading to public/private key encryption using a Bitcoin address, users can now make transfers pseudonymously (although not anonymously) and securely. It’s important to remember that every Bitcoin is recorded on the blockchain and that the Bitcoin address indicates both the sending and receiving address, as well as the value and time of the transaction. That transparency is fundamental to the concept of decentralized currency.
How To Get a Bitcoin Address
Bitcoin addresses are generated through the digital wallet or Bitcoin client. Specifically, the wallet creates a private key from which a public key is also produced. The user signs the transaction with their private key and verifies their signature using their public key. To find your Bitcoin address in order to receive a payment, click on the “Receive” toolbar in your Bitcoin wallet. You can safely copy the alphanumeric code to your clipboard and send it to someone by email or SMS. Most wallets also allow you to convert it to a QR code.
Your wallet will generate a new Bitcoin address each time you make or receive a payment, and although you could recycle the same address, blockchain gurus recommend that you should generate a new Bitcoin address with every transaction.
All your previously used addresses can continue to receive payments but bear in mind that someone can use your Bitcoin address to see how much you have stored in your wallet, and every transaction you’ve made using that address, simply by pasting the address into a blockchain explorer.
Better Security Using TransitNet
At TransitNet, we think that the person who should know most about the volume and location of your crypto assets is you. That’s why we created the world’s first off-chain crypto title registry to allow you to securely manage your crypto and prove ownership if necessary. In the event that your private key is lost or stolen, you can lay a legitimate claim to what is rightfully yours. Join the forefront of the new crypto infrastructure. Request an exclusive registration for TransitNet’s title registry when it launches.
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