What is a Bitcoin Wallet Address?
Wallet addresses are integral to the Bitcoin network. All bitcoins in circulation are assigned to certain wallet addresses and don't exist apart from wallets. The standard definition of the Bitcoin wallet address tells us that the address is associated with a pair of private and public keys. These keys are still the core of any Bitcoin wallet address.
The way we interact with private and public keys has changed with the evolution of Bitcoin wallets. Modern wallets have elaborate user interfaces (UIs) and extra features. They come in multiple forms, including physical ones. Some wallets don't even provide users with their keys to avoid human errors.
In this article, we will explain what a Bitcoin wallet address is and move from the basic definition to more practical uses e of modern Bitcoin wallets.
- What is a Bitcoin wallet address? How does it work?
- Different types of wallet addresses
- How do I create a Bitcoin address?
- How do I find my wallet address?
- Tips for using your wallet address for sending and receiving payments
What is a Bitcoin Wallet Address? How Does It Work?
Bitcoin is stored and operated via a wallet associated with the public and corresponding private keys. A public key indicates a certain wallet. It can be shared with others so they can send you coins. A private key is used to sign transactions outgoing from the wallet. It can be loosely compared to the PIN of the bank card. If wrongdoers obtain your private key, your wallet could end up empty. Thus, this is why it is essential to keep this key a secret.
Although it is commonly believed that crypto wallets hold and store cryptocurrencies like a traditional wallet, the fact is they don’t, and instead, they store private and public keys that are needed to purchase cryptocurrencies and sign off transactions. Information concerning the ownership of coins on the other hand is stored on the blockchain and is available to anyone.
When you send someone BTC, you indicate the public key of the receiver party's wallet and sign the transaction using your private key. The info that a receiving party now owns a sent amount of BTC is recorded on the blockchain. Block explorer websites show the contents of each Bitcoin wallet and the associated transactions list. Timestamps, sent/received amounts, and transaction hashes can be found there too. Many wallet applications use the hierarchical deterministic framework to obscure the connection between the transactions. Such wallets are called HD wallets. They create a separate cryptographic key pair for every transaction.
Different Types of Wallet Addresses
There are different types of Bitcoin wallets. Each wallet type has its pros and cons. The preference for one wallet type over another depends on your needs and priorities. High safety of use can sometimes go at the expense of convenience or accessibility, etc. Let's take a closer look at the types of Bitcoin wallets.
Mobile wallets are one of the preferred options for most people. The reason is not hard to grasp: mobile wallets usually boast a user-friendly interface, easy access, little to no cost, and multiple extra features — from supporting several cryptocurrencies to in-built exchanges. This type of BTC wallet is compatible with many frameworks Bitcoin-friendly merchants use. Some of these wallets allow spending crypto coins in shops serving as a virtual card.
The accessibility of these features on a smartphone makes mobile wallets an easy choice for many cryptocurrency owners. However, mobile wallets have their drawbacks as well. They come up as a trusted intermediary between the transaction parties. This does not fit the original spirit of Bitcoin and forces you to entrust your funds to a third-party entity. More than that, mobile wallets are regarded as weak in terms of security, as smartphones are not the best-protected devices on earth.
One of the crucial means of safeguarding your crypto journey if you use a mobile wallet, is 2-factor authentication (2FA). The best way to have 2FA is to install the authentication app on your smartphone. However, email or/and SMS verification can be an additional option. It dramatically decreases the probability of your account being accessed by hackers.
Web wallets are custodial wallets, meaning they provide a graphic interface with features and all the needed information about your portfolio, but you will not be able to access your keys. Your keys are stored on the wallet's servers, and the wallet team is responsible for keeping your keys safe. When you use a web wallet, you unavoidably invest a share of the trust, just like when depositing your money in a bank account. Like in the case of mobile wallets, it contradicts Bitcoin's initial principles. However, many people find entrusting their keys to reputable wallets convenient as they delegate the hassle of keeping them to the web wallet platform.
Another selling point of web wallets is high accessibility. All you need to access your funds is a device with an Internet connection and a browser. Some web wallets offer applications as well. Most web wallets are full of extra features. In general, they are a lot like mobile wallets but without strict bundling to a single device and no access to your pair of cryptographic keys.
Many web wallets are associated with certain crypto exchanges. Crypto trading platforms are the frequent target of hackers. It increases the risks of using web wallets. Quality platforms will compensate for your losses if you get robbed, but exchanges themselves can turn out to be exit scams or insolvent. If it is the case, you risk ending up losing your BTC.
It is recommended to use a separate email address for your activity on the website to prevent hacking of your web wallet. Turning all the available protection features is a must.
Desktop wallets are another type of crypto wallet application. Unlike mobile apps, they are installed on computers or laptops. Most probably, you already guessed it from the name. Desktop wallets store the keys on users' hard drives or SSD cards.
You won't be able to get this wallet with you on a walk, but desktop wallets have an advantage over mobile and web wallets because they are more secure. No one stores your keys on your behalf, and if you avoid installing the malware, your funds will be safe. Having a separate computer for crypto operations is a wise move if you seek a higher level of protection.
Some regard desktop wallets as a handy option for those who trade crypto via computer or laptop. However, it is advised to withdraw large amounts to safer offline wallets (also known as cold wallets).
You might run a full node wallet on your device to get full control over your Bitcoins, regulate your transaction speed, contribute to the network decentralization, and enjoy other pro features. Other desktop wallets offer other benefits, like enhanced anonymity, etc.
A paper BTC wallet is the most basic type of wallet. It is a piece of paper with the BTC public and private keys written down in it or/and a QR code for quick access to the keys from external apps (exchanges, payment processors, etc.). This wallet is offline. If you ensure that no one's watching while you create this wallet and you won't lose or damage this piece of paper, your funds will be safe. To avoid using your keys while performing transactions, you should opt to use another type of wallet, a hardware wallet.
Hardware wallets are physical offline wallets that can be connected to an external device via USB. The screen displays the menu and all the necessary data. Connection is needed to perform transactions. This type of wallet is better for long-term storage of high amounts of BTC, not for frequent transactions.
Most experts call them the safest type of wallet. All critical actions on hardware wallets require inserting a PIN code. If you forget it, you can restore the access with a seed phrase. If you lose the seed phrase or the device itself, your money will be gone. It's understood these wallets don't go for free. It only makes sense to buy a new one directly from the manufacturing company.
At XGo, we are creating a world where you don’t need a traditional bank account to access financial services, and managing your crypto assets is as easy as using your chosen social media handle. Introducing Wallet ID, your personalized passport to the new financial system. It is the perfect entry point for anyone who wants to get started with crypto.
Through Wallet ID, you will be able to bind your Bitcoin wallet address as well as access a suite of services that XGo has built and continues to build, including sending and receiving crypto, spending crypto, buying/selling/swapping crypto, rewards, investing, and trading crypto. All you need to do is claim a single, personalized, and easy-to-use string of letters and you are good to go. The best part is that your Wallet ID is not limited to XGo services, it works with many other service providers across the crypto ecosystem.
How Do I Create a Bitcoin Address?
There are several ways to get a Bitcoin address. You can create a paper wallet on the Bitcoin.org website, download any wallet app on your device, or create a web wallet account and claim your address there. The process can differ in each case, but it won't take much time.
If you use crypto exchanges or similar platforms, they can provide an address when you request the transaction. This address will be associated with your account on such a platform. Hardware wallets can only be ordered from the manufacturer. You will learn everything you need about your BTC address from the instructions attached to the product.
How Do I Find My Wallet Address?
You can easily find your BTC address in most wallets by clicking the "Receive" button. It will generate a new address or show the existing one, depending on the wallet type and its settings. The address has the form of a string of 26 to 35 characters (numbers and letters in lowercase and uppercase). All the Bitcoin addresses start with numbers "1" and "3" or "bc1." If you see an address starting with a different character, then you are dealing with a wallet for another cryptocurrency, and you won't be able to receive BTC using this address.
Tips For Using Your Wallet Address, For Sending and Receiving Payments
Regarding security, it's crucial not to share your private keys with anyone. It can lead to stealing your funds from the BTC address associated with the leaked private key.
Another important rule is to double-check all the data related to transactions you make. If you send BTC, make sure you send it to the correct wallet address, and it's not a different cryptocurrency's address.
Check if the amount is correct. The BTC transactions are irreversible, so mistakes can be costly. If someone is going to send you BTC, ensure that the person has your valid BTC address.
What type of BTC wallet is the best?
It depends on the way you use Bitcoin. Consider using a paper or hardware wallet if you need a wallet to store large amounts and do rare transactions. For frequent transactions, quick access to funds, and multiple functions, you can use web and mobile wallets. The desktop wallet is something in between. You can combine the specs of several types of wallets through binding them to your Wallet ID on XGo.
Is the Bitcoin address private?
Bitcoin addresses are pseudonymous as they replace your personal data with a string of random characters. However, these addresses can be associated with your personal information in some instances. If you wish to increase the privacy level of your BTC transactions, you should use HD wallets or transaction mixer platforms.
Is sharing my Bitcoin address safe?
Without access to your private key, no one will be able to steal Bitcoins from your wallet if you post your BTC address publicly or send it to someone. So, technically it is safe.
However, sharing your address online creates an opportunity to associate this address with you and check how much BTC you have. Criminals can use this info for extortion or the other way. So it's better not to share your public key without necessity. If you are going to publish your BTC address, it's better to create a separate one for that purpose.