Bitcoin address: Comprehensive Guide 2023

The Bitcoin revolution and the use of Bitcoin addresses has been going on for over a decade now, but it is still not fully mainstream. There have been major developments in the world of cryptocurrencies recently that are not always easy to keep up with. Even though Bitcoin is the largest cryptocurrency, it has also not been easy to understand for those who are not familiar with it.

Getting started with Bitcoin is after all, it's not rocket science, and you don't need to understand the technical side to use it successfully. All you need is a Bitcoin wallet and a Bitcoin address, and that's what we'll cover in this post!

What is a Bitcoin address?

Bitcoin (or BTC) is a digital currency that can be sent from one person to another. To receive a transaction, you need a Bitcoin address, also known as an address or recipient address. It is the address that identifies who the recipient is, and the address that you give to the person sending the BTC to one.

A Bitcoin address can be shared with others and is often compared to a bank account number. Each address is unique and starts with either bc1, 1 or 3. An address contains between 26-35 characters.

Different address formats

As you read earlier, an address starts with letters and a number, or just numbers. This is what the different types of addresses look like:

• P2PKH addresses use a pay-to-public hash and always start with the number 1:

153GkaVZNi8AU9w4RatELNYUYE2oXtFe2x

• P2SH addresses instead use a 'Pay to Scrypt' hash and always start with the number 3:

3JGEMnF38raPcGkAvtQGIUYH4h1xhDD3Q

• Bech32 addresses are a form of so-called Segwit addresses that start at bc1:

bc1qjm2qx2dvzy2fza487uwqlmwxxz4y3nuvm0m9qm

These are three different address types, with the last one being the most recent variant. You can send Bitcoin to all three of these different types of addresses, but P2PKH and P2SH are the most widely used because they have been around the longest. Bech32 is an encoding system that is also used to encode Lightning invoices.

How to create a Bitcoin address?

Just as an email address ensures that an email gets to the right address, a bitcoin address ensures that a transaction shows up safely. You can create addresses for Bitcoin at several different ways, and you can divide a BTS address into several different parts.

Wallet address: public and private keys

Since each address is unique and coded in a specific way, each address also contains cryptographic information, also known as keys. There are two different keys that we will go through.

The address you give to the sender is a so-called public key. You can compare it to your bank account number, and it is also the key you share with others.

The second key is called the private key and is linked to a public key.

What is important to know is that these two keys, despite their interconnection, are not identical, but rather asymmetrical. You should keep the private key to yourself, because it is the holder of the private key who owns the asset, i.e. the available BTC.

To put it simply:

• To receive BTC, you give your bitcoin address, which is the public key.
• Should you spend BTC, you need the private key to prove to the blockchain that you own the asset at that address.

For both these parties to fulfil their function in a smooth way for the user, you need a Bitcoin wallet.

Bitcoin wallet

To manage your Bitcoin address, you need a wallet. It works almost like a regular fiat wallet except that it is digital. You can draw the comparison because instead of holding cash, it holds a collection of Bitcoin addresses. So you can receive, send and store Bitcoins in it by managing your public and private keys.

Using a wallet is free of charge and there is no cost to the user to generate addresses. You can generate as many addresses as you want thanks to the pseudonymous nature of the system.

Different types of wallets

There are several ways to access your Bitcoins. Below are a few different options:

Paper wallet

You can store your Bitcoins on a piece of paper ? without being connected to the internet! This is a safe option to store your cryptocurrency. You get your private and public keys in a QR code, and you only need to print the paper to manage them later.

Some argue that paper wallets are less insecure alternatives. This is not due to any security risk in the technology, but more to the human factor. The reason for this here is because you can easily losing or accidentally destroying a piece of paper and losing your entire asset. However, if you have a secure and private way to store your paper, it is a safer option than otherwise.

Hardware loan book

If the idea is to how to store your Bitcoins for a longer period of time, a hardware wallet is a good option. This is because it is a physical device that you plug into your USB device. It is usually small, like a dongle, and is used to permanently store Bitcoins.

The two main companies that create hardware wallets are Trezor and Ledger.

Wallet for the computer

You can keep your Keeping Bitcoin safe by storing them in a digital wallet via your computer. These applications are almost designed in the same way as a paper wallet, in addition to the ability to send and receive, can also manage everything visually.

Here are some popular computer wallets:

• Electrum Wallet
• Samurai Wallet

Wallet for your mobile phone

Whether you use an iPhone or Samsung so can you can also manage your Bitcoin addresses via your mobile phone. It works more or less the same as on the computer, except that the application is adapted to a mobile phone.

Here are some popular mobile phone applications:

• Electrum Wallet (Android)
• Blue Wallet (iOS / Android)

Frequently asked questions & answers ? FAQ