In continuation of my articles about bitcoin wallets i’d like to tell you about a bitcoin address. Read carefully, because all that information is crucial to secure your money when you’ll start bitcoin trading.
When mining bitcoins everything you need is just a software, a wallet and an internet connection. But it is not enough to possess a bitcoin wallet to start playing the bitcoin markets, since you can’t just download BTC to your wallet. When buying bitcoins online, you must provide a special address to your counterparty in order to transfer money to your wallet and make sure that the transaction is successful. Generally speaking, bitcoin address is a unique identifier, containing the information about the virtual location of your bitcoin wallet. Is is a bit similar to your email address attached to your paypal account. However, bitcoin address is not intended to be permanent and can be changed on your demand. Literally, you can (and must) generate new bitcoin address for every transaction. This will help you to keep your savings secure. Of course, all addresses are encrypted, but too much security is never enough.
Bitcoin address structure and encryption
Basically, bitcoin address is a line of 26-35 alphanumeric characters, which is a public half of an asymmetric key pair. Usually, bitcoin address looks like this: 3AEtHQD7RiAE6uzMj2ZifT9YgNrkSgzQX
This line is public, and it means that you can share it with anyone . But your wallet will generate also a private key, that must be kept secret. With private key, you will validate your private key when receiving the money.
Now let’s look closer at your bitcoin address. The first number – “3”, means that address has multiple private keys (e.g. “1” would mean a single private key). By the way, each address has its own matching private key, which is basically a line of numbers 256 bits long and is stored within your bitcoin wallet.
You should also know about the bitcoin address types:
- Just a simple public address that is using a single private key, always having “1” as a first digit.
- The address that is using several private keys, usually having “3” as a first digit.
You should always prefer the second type. Again, some security tips:
- generate new bitcoin address for every transaction
- do not handle your address to anyone except the person you are dealing with
- do not transfer money to the same address again, ask your counterparty to generate a new one
Each address can be generated for free by any user. Basically, each address is created by generating a line of random numbers and by performing some specific mathematical operations. However, there is are plenty of online and offline software tools for that, and even your bitcoin wallet of choice has some built-in tools for bitcoin address generation. I don’t think that you really need to know the all the features and nuances of encryption til you are an advanced bitcoin trader.
Stay in touch, read my articles, and you will learn something new about cryptocurrency trading every day.