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What is a Bitcoin Address?

One of the things I get asked all the time is “what is a bitcoin address?”. There’s the full technical answer for someone who wants to build bitcoin technologies, but there’s a lot less to know to be a user of bitcoin nowadays.

For example, I bet you didn’t know that email runs on a protocol called SMTP (Simple Mail Transfer Protocol) — which plays a similar role in email that the bitcoin protocol does in transferring bitcoin (although with some key differences).

But if I asked you to fire off an email to fluffy@gmail.com you could have something ready to send in less than a minute. Sending bitcoin is a similar level of complexity, only you don’t need to write a message to send bitcoin.

bitcoin kitten
Even Fluffy can send an email with her eyes closed.

A lot of people seem to worry about learning the complex mathematics behind the bitcoin protocol before buying and using bitcoin. This might have been true pre-2014 before hoards of startups set out to make bitcoin accessible, but today it’s simply not the case. So I’m going to give you the basic information you need to know to be a user of bitcoin, but not a mathematical expert. So let’s get started!

 

What is a bitcoin address?

 

bitcoin address - public and private keys

A bitcoin address is one of the key concepts that make the currency and the blockchain work. It isn’t quite as straightforward to define or explain as an email address. You first need to know about two other parts of bitcoin in order to see how the address fits into the picture: a private key and a public key. The main difference is that you don’t use the same address to send bitcoin as you do to receive it.

Instead, there are three key terms to know:

  1. Private key: a 64 character long code using any combination of the letters A-F and the numbers 1-9. You can see an example of a private key on the image above.  This is what you use to send money out of your bitcoin wallet, and is therefore what needs to be completely secure.
  2. Public key: a public key is the unique identifier for your cryptocurrency wallet that is known to the public. The public key operates in the background unless you want to dig into records.
  3. Address: the address is another identifier, but it’s derived from the public key. This is the identifier people will enter to actually send bitcoin to you. An address is a single-use identifier that will be automatically generated for each transaction.

The way that you send money to a bitcoin address is actually quite similar to the way you send an email to an email address, but it differs in one big way:

Bitcoin addresses are single-use tokens

You use a new address for every bitcoin transaction you send – this is very different from email where fluffykittens@gmail.com will always be reached by typing in “fluffykittens@gmail.com” in the “to:” field.

Don’t worry – your bitcoin wallet will automatically generate an address for you. It’s a seamless process that happens smoothly for the user. You’ll think about generating addresses as much as you currently think about Simple Mail Transfer Protocol when using email today.

An example of a bitcoin address in action

If we look at the way a bitcoin transaction works we’d be looking at something like this:

 

 

Tom uses his private key to send 0.1BTC –>  Jenny’s address –> Jenny will now have 0.1BTC stored on her wallet, ready to repeat the cycle and be sent by their private key to someone else’s address when ready.

 

 

So to reword that, Tom will use his private key to send 0.1BTC to Jenny’s address, but because the address isn’t meant to be permanent the address will redirect the bitcoin to Jenny’s private key to be stored on her wallet. The private key is like your email address, as the wallet is the server that your email data is securely stored on.

Check out this post on bitcoin wallets for a breakdown of what a cryptocurrency wallet is and the different types of wallet. Or if you’d rather just go with the easiest secure option to get started, Coinbase is free and with it you can buy, store, send and receive bitcoin as easy as an online bank account.

 

Get Coinbase Now Use this link to get a free $10 after buying $100 of bitcoin.

 

Does this answer your questions about what is a bitcoin wallet? If not, leave a comment below or contact me to let me know how I can improve this page!

 

About the author

Nick Hastreiter

Shaping the future of your industry? Send pitches to Nick at Future of Everything .io !