What is a Bitcoin address and why is it needed?
2017-09-22 00:00:00:
For many users of the global network, it is already clear what cryptocurrency is, its capabilities and potential, but the Bitcoin address remains a mystery. What is it, what are the addresses, and also, why are they needed? You will learn all this and much more from our article.
It is immediately necessary to clarify that to use cryptocurrency no programming skills are needed. There is enough user knowledge to work on a personal computer and on any modern gadgets (mobile phones, tablets). After all, we are talking exclusively about a means of payment.
What is a Bitcoin address?
Many people have bank cards that show a combination of 12 digits. With their help, payment is made in the network and in traditional stores where there are special terminals. In fact, this will be the answer to the question, what is the Bitcoin address of the user is virtual wallet. It is a number, which, unlike a bank account, includes a random sequence of numbers and letters of the Latin alphabet. Their number can vary from 27 to 34 numeric and alphabetic characters.
An example is the following address: 1HA56CLyPkKw4ULppT46nBYyfp2Xk9LU6n. This address contains everything that the sender needs to know in order to transfer Bitcoins to the recipient. One user wallet can include an unlimited number of addresses. But their key feature is that they are not interconnected. In addition, you can become the owner of the address free of charge.
Address Confidentiality
Since the Bitcoin address is public, everyone can find out how much money was transferred or received from it. At the same time, finding out to whom it belongs and for what goods or services the funds were transferred has the status of hidden information.
Bitcoins and other types of cryptocurrencies do not have widespread payment instruments in the form of cards. For this reason, for the convenience of users and the expansion of payment options, each cryptocurrency address can be represented as a QR code. Sending funds in this way is not only confidential, but also absolutely safe. Therefore, if the user knows the Bitcoin address and understands what an electronic wallet is, then he will be able to transfer funds to another person without problems.
It must be understood that the address is independent of the functioning of certain servers, as is the case with the largest payment systems. Yandex.Money or WebMoney use their servers to transfer funds, in the event of which shutdown, the system stops functioning. With cryptocurrency, everything happens in a completely different way: in the world there are hundreds of thousands of servers owned by different people. Therefore, the transaction is carried out in any circumstances.
What do you need to create your own Bitcoin address?
Based on all of the above, a completely logical question arises - how to create a Bitcoin address for receiving funds? This process takes a matter of seconds, but to generate the address, a wallet closed to the public is required, in which the money will be stored. As you know, virtual wallets can be installed on a computer or function in a cloud storage system. In both cases, the procedure will be exactly the same.
Most users who operate with small amounts of money prefer mobile virtual wallets. To install them, you do not need to download client programs to devices. So, before you create a Bitcoin address, you need to have a wallet.
One example is Blockchain.info, one of the most popular resources. According to the information provided on the site, more than 7 million people use the wallets of the service. After visiting the site, you need to create an electronic wallet, fill in all the fields that include the introduction of mail, password and other data. All information should be recorded and saved, because, in case of loss, it will be impossible to enter the account. Creating an account takes a few minutes. After entering your account, the address on the left side of the screen will be ready to receive and send funds. Thus, we looked at how to find out your Bitcoin address in a wallet. In the future, it can be used to send and receive cryptocurrency.
If we are talking about the use of cloud storage for Bitcoin, then we should not be surprised that the formation of addresses occurs in automatic mode. In this case, the system can create temporary addresses to perform a specific operation. In this case, the funds are still displayed in full and the old addresses do not disappear anywhere. Sending cryptocurrencies to temporary numbers may take longer, sometimes up to two hours. This metric depends on the resource policy. In any case, the creation of a Bitcoin address occurs instantly, as the system automatically generates it.
Today, most online services create addresses automatically. On some resources, the system suggests creating Bitcoin addresses in manual mode.Should I use a lot of addresses for transactions? The answer will be in the affirmative, and professionals recommend creating a new Bitcoin address before making a financial transaction for a large amount.
Offline address generation
Users who do not like random addresses generated by client programs can use special utilities. Some programs allow you to create unique numbers without connecting to a network. Service is especially relevant for business. For example, for the baksmany.com exchanger, the Bitcoin address 1BTCbaksmany1K54ULppT67nBYyfp2Xk9L will be effective and convenient. Thus, the name will be associated with the name of the company.
The wallet’s Bitcoin address is generated using the computer’s computing resources according to the source files, which are downloaded in the form of templates. The speed of the operation is based on probability theory and depends on the power of the equipment.
The technical part of the Bitcoin address
From a technical point of view, each Bitcoin address is presented as a 160-bit unique data block. Each user can sign this block with a secret key, which is transmitted through an insecure channel and allows the recipient to identify information. In this case, we are talking about the use of an electronic signature based on a cryptographic system with a public key.
When a new Bitcoin address is generated, regardless of how it is received, a pair of keys is automatically generated to ensure its security.
Important nuances of data storage
Private keys, which are located in the wallet.dat file and are secret, deserve special attention. When using a wallet on a desktop computer, you must periodically copy the data from this file. Online repositories automatically update after each transaction. That is why the services offer the user a new Bitcoin wallet address for each financial transaction.
If the owner uses his own offline wallet, on which he regularly creates new addresses, then after backup from an earlier version, all funds received after the backup will be irretrievably lost.
In any program, the use of an address is absolutely irrelevant. All of them are equivalent and independent units, and are also stored in the wallet forever. On average, the weight of 1 million addresses is about 0.05 GB. Therefore, as a rule, there are no problems with their storage. In order to remain confidential in the payment system, you need to periodically change the Bitcoin address of the wallet, which is regularly provided by online services.
Features of sending funds to Bitcoin addresses
It is impossible to send money to non-existent Bitcoin numbers, since each one has a special verification code. Nevertheless, if during generation errors were made or the recipient lost access to the key code, the funds will be lost. In addition, you must follow simple rules for entering data. Ideally, the Bitcoin address should be copied by the user to the clipboard, and then indicated in the required field. If manual input is used, then the case is mandatory. Before entering your Bitcoin address, you can find out if it is possible to use a QR code.
Errors in performing these operations lead to the fact that funds are sent to other peoples accounts or are lost. In some cases, the presence of errors in the address is automatically rejected by the system. The fact is that some of the digits inside the code constitute a checksum, the mismatch of which does not allow the transaction.
The alphanumeric code can contain almost all the Latin characters. The exception is the letters O, I and l, with the introduction of which difficulties may arise. After the user finds out his Bitcoin address, you should pay attention to the first digit. So, currently all numbers start with one. In test networks, the first letters m and n are used.
A bitcoin address is an essential element in ensuring the safe and error-free conduct of all financial transactions. We examined what is the address of Bitcoin, as well as the main issues related to its creation and application. Knowing these details will allow you to effectively use the first cryptocurrency Bitcoin to carry out transactions of various kinds.