Bitcoin (BTC) has now established itself as the leading cryptocurrency and the second most preferred mode of electronic payments after fiat currency. The increase in trading volume fueled by the endorsement of the digital currency by renowned entrepreneurs recently is among the reasons why Bitcoin prices are soaring high. Not to mention the transaction security and transparency achieved by decentralized blockchain technology maintain Bitcoin’s credibility.
Trading of Bitcoin comprises three essential components – a Bitcoin exchange that facilitates buying and selling coins, a digital wallet that stores Bitcoins, and a Bitcoin address that determines the wallet location.
Since Bitcoin is a virtual currency, these components execute the transaction in a coordinated fashion if someone is connected to the Internet. To help Bitcoin enthusiasts understand why it is crucial to a Bitcoin transaction, we will touch on various aspects of Bitcoin address.
What is a Bitcoin Address?
As the name implies, a Bitcoin address specifies the digital wallet where Bitcoins can be sent to or received from. You can think of Bitcoin addresses as the information required for making a transaction.
Much like bank accounts and email addresses necessary for making fund transfers and exchanging messages, Bitcoin addresses ensure that the sender and receiver know the destination and source of the transaction.
A Bitcoin address, also known as a public address or public key, is encrypted with hashes and requires a private key or password to access it. While public keys are temporary and visible to the recipient, private keys can be changed too but must be kept secret at any cost to secure the wallet.
A public address consists of 26-35 alphanumeric characters that can also be converted into a QR code. Usually, a BTC address starts with the number 1 or 3 or bc1. Most Bitcoin exchanges and digital wallets generate a Bitcoin address automatically before a transaction. It is worth noting that it is possible to reuse a previously used Bitcoin address, but for privacy reasons, one should generate a new address each time a transaction is made.
How to get a Bitcoin Address?
There are primarily two ways to get a Bitcoin address – the Bitcoin exchange and the Bitcoin wallet. Both the mediums store public and private keys and take extraordinary measures to protect them. Bitcoin exchanges can be accessed online through web, desktop, or dedicated mobile apps. Besides, there are mobile and hardware wallets that serve the same purpose. Users can choose either of them at their convenience. The process of generating a Bitcoin address is quite simple:
- Register with the exchange or the wallet provider.
- Navigate the ‘receive’ or ‘send’ option.
- Select ‘create a Bitcoin address.’
- Share this address with the sender or the recipient.
- Copy and paste the address in the payment box or scan it in the form of a QR code.
Remember that once a Bitcoin transaction is made, it cannot be altered or reversed, so it is recommended to check the Bitcoin address before processing payments carefully. Now that you are aware of creating a Bitcoin address, it is time to know about reliable wallet services.
- Web Wallets: Using web wallets is as simple as other online payment systems. Many crypto exchanges also provide in-built digital wallets for users. These wallets come with an extra layer of security, such as passwords, two-factor authentication, and anti-money laundering questionnaires.
- Desktop Wallets: Software programs that can be installed on the desktop computer. They are considered more secure and efficient than other variants.
- Bitcoin Core
- Bitcoin XT
- Electron Cash
- Mobile Wallets: Because of the accessibility of smartphones, mobile wallets are the most popular of all. They are available for use on Android, Windows, and iOS mobile phones.
- Airbitz Bitcoin
- Hardware Wallets: Typically, these are external hard drives that work offline and are less prone to cyber-attacks. Moreover, they integrate various security features like biometric and duress PIN.
- Coldcard Mk3
- CoolWallet S
- D’CENT Biometric Wallet
- Ledger Nano S
- Ledger Nano X
Bitcoin Address Example
Based on the alphanumeric characters and wallet used, a Bitcoin address can be of three different types – P2PKH, P2SH, and Bech32. Let us look at the examples of these address formats.
- P2PKH (Pay to PubKey Hash or Legacy address) – Starts with the number 1 and is case sensitive. Example: 13dH17n5eezpuEmy2tAQAmv8WnuuxDiuoW
- P2SH (Pay to Script Hash) – Starts with the number 3 and is case sensitive. Example: 3JPBz16AUXYANNHrKj2hiub2cBT6FQdhpA
- Bech32 – Starts with the alphanumeric characters bc1 and is not case sensitive. Example: bc147EuDRi6QryRioMTB9NxfCod9MQjU8ttV
Bitcoin boasts so many features that it becomes an exciting and confusing virtual currency at the same time. Furthermore, it requires one to go through several steps to conduct a Bitcoin transaction. Though the mechanism of generating the BTC address is relatively straightforward, one must be vigilant when selecting the digital wallet to ensure that it encrypts private keys and account recovery phrases and double-check the address before sharing it for transaction purposes. We hope that this post will enhance your understanding of the Bitcoin address. Apart from that, we all know that Bitcoin is the greatest thing that has happened in this decade. Many investors and supporters make lots of money with Bitcoin trading. You can also make an investment and make a huge profit from it through Immediate Edge Trading Platform. It is a most innovative platform which works automatically. To know more about this unique platform you can visit its official website or check out reviews of it.