If you want to trade Bitcoin, you must be able to send and receive hidden funds from a specific location. And just as we use a mailbox for this, in the case of a crypto, we rely on the Internet and digital assets are represented by a series of characters. You want to know what, exactly, is a BTC address? We’re already explaining.
How does a Bitcoin address work?
So what is a BTC address? First of all, it is a unique identifier, which is used as a virtual location where cryptocurrencies are sent. Users can send digital assets to Bitcoin addresses, as well as FIAT currencies to e-mail addresses. Most Blockchain experts recommend generating a new BTC address every time you send or receive a payment. This is your security measure that prevents other users from keeping track of the funds being sent.
What do I need to do to get this address? First, you need to download your Bitcoin wallet, a software package that allows you to send, receive, and store your funds safely on the Bitcoin network.
Bitcoin wallets also contain information about your private key, which is essentially a password to use your funds. The software will generate a new Bitcoin address each time you enter a new transaction. There are several types of hidden wallets, including mobile, web and hardware.
Where to store Bitcoin?
Although we’ve already written about Bitcoin wallets, it’s worth discussing this issue again. Starting with the mobile version, which is most convenient. But your private key and your funds are simply stored in an app on your phone that anyone can access. This involves a high risk of losing all your funds. This problem can be solved by using the fingerprint authentication capability of your phone. The mobile wallet can be downloaded from the IOS, Android and Windows Phone apps store.
Another type of wallet worth mentioning is the web wallet, which is as convenient as mobile, but also risky. It is enough that an unauthorized person knows your personal data. This allows them to hack into your email box and then directly into your cryptocurrency wallet. If you want to use this type of wallets just register on the operator’s website.
It is also worthwhile to replace the hardware wallet, which is like an external hard drive for your funds. This is a device that you can easily connect to your computer. This type of wallet is by far the safest because it limits the exposure of your funds to the Internet and is therefore protected against hacker attacks.
Types of Bitcoin addresses
Bitcoin addresses consist of 26-35 characters and contain alphabetical and numerical markings. Such identifiers start with “1”, “3” or “bc1”. Currently 3 forms of addresses are used.
This is the basic and by far most popular transaction model in the BTC network. This type of addresses use scripts responsible for the spread of sent funds, which are based on a public key and digital signature.
This address contains a script that requires certain conditions to be met for a transaction to be properly approved. The sender sending funds to this address has lower transaction fees. The crypto script is fixed in size and allows you to send funds to any address without any regulation of all fees. This is because the funds are transferred to the person who spends the funds contained in the script. If you want to execute transactions, you need to enter at least 2 private keys, which generate unique digital signatures. This type of address makes it easier to keep your privacy as the scripts only contain one-way shortcuts to other components.
This is a popular segregated address and is longer than that of the “P2” forms. Segment is an update that allows to remove signature data from the transaction, additionally it allows to store it outside the block. It makes the block relieved, thanks to which transactions are faster and fees are reduced. This form is supported by most portfolios and software, however, in case of exchanges it is problematic. Funds are sent to these addresses, but transactions in the other direction are not possible. Currently less than 1% of BTC is stored at this address.
How to execute transactions with a BTC address?
The most important thing is to give your address to the people you are trading with. That’s why it’s a good idea to place Bitcoins in a place that’s easily accessible. Once you have received the address, in order to send any amount of BTC, you need to copy the system of characters, which consists of the ID, to the “Send” section in your crypto wallet.
Bitcoin addresses are generally too complicated to remember for most users, so QR codes are often used to provide them. A long string can be daunting, especially for newcomers to the crypto world. However, if the same thing is presented in an interesting and simple form, it has a much better effect on user reception.
The Bitcoin network has a high level of transparency. Tracking of trade operations is possible thanks to tools that have been created especially for this purpose. The best example is the Blockchain ExplorerBlockchain Explorer platform, which allows you to check all transactions made in the bitcoin network.
Bitcoin is a relatively young form of a financial measure, which makes it extremely exciting. Its potential for global use is delightful for some, but frightening for others. Sceptics believe that BTC is safe enough to become a global currency. However, the one-time use of Bitcoin addresses makes the transaction impossible to detect.