28 February 2020
Bitcoin is rapidly gaining importance and many people are engaged in buying and selling them. For managing these bitcoins they use bitcoin wallet. But the fact is people fail to understand the basics behind the bitcoin wallet; What is a bitcoin address? How to get a Bitcoin Address and its importance? Well, we are here to tell you the basics of each for a better understanding.
What is a bitcoin wallet?
As we all know that bitcoins are completely virtual and cannot be stored anywhere. So for storing bitcoins, we need to use special software known as Bitcoin Wallet which acts like our physical wallet with the only difference, i.e. they carry Public and Private Keys instead of real cash or credit card. The public keys are the keys which can be sent to anyone such as bank account number, whereas the private keys are secret pin numbers which allow you to get access to your bitcoins/bitcoin wallet or to send them. There are different types of bitcoin wallets such as desktop, mobile, web, and hardware. To understand each of them in detail read our article Know the right way to store your crypto!
What is bitcoin wallet address?
A bitcoin wallet address is the same as bank account number having 26-35 alphanumeric characters. A wallet address is generally a long alphanumeric string starting with either “1 or 3”
There are different types of formats: 1. P2PKH (pay to public key hash) beginning with the number 1: 1JBGqrX7kZjfq4mqD9PmU3ZFiq9SiFaURk
2. P2SH (pay to script hash) beginning with the number 3: 34qkc2iac6RsyxZVfyE2S5U5WcRsbg2dpK
3. Bech32 beginning with bc1: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq
The standard format used currently is P2PKH (pay to public key hash). This string is the public half of an asymmetric key pair. These addresses are generated through cryptographic operations i.e. Asymmetric signature algorithm is used to generate a private key which is later on used to generate a public key. The private key is used to sign the transactions and signatures are verified by the public key.
Why is Bitcoin Address important?
A bitcoin address can be used to define all the information of the bitcoins that you hold such as their past transaction history and where they are sent. Also, sending bitcoins to a wrong address can make your bitcoins lost permanently and you cannot get them until you trace the receiver and request them to send you back. Thus, bitcoin addresses play a vital role in a blockchain network for recording the transactions. Once, an address is used there may be chances that it can be used to trace the owner, so for good security reasons, it is highly advisable to use a new address for every new transaction you make.
Can bitcoin address be customized?
Yes, a bitcoin address can be customized even like our bank account numbers. Bitcoin addresses can be customized in two different ways.
The first way is done by yourself, in which no one can see/view your public and private key pair and it is considered as the safest method. This way requires computer knowledge with the correct software and processing power to be dedicated to your CPU.
Bitcoins pool such as BTC.com is used as another way for customizing bitcoin address. Here miners use their CPU and GPU power to find the address of your choice and send it through various communication pathways such as email or a post. This is a quick process, but a bit risky because the private key may be stored by miners and can be used by them in the future to steal your funds in your bitcoin wallet.
I’m sure now, you know everything related to a bitcoin wallet, bitcoin address, how to get it and its importance in the cryptocurrency world.