What is a Bitcoin address?
The digital destination for receiving bitcoin
A Bitcoin address is a sequence of letters and numbers that serves as a digital “destination” for receiving bitcoin.
To send bitcoin to someone, you need their Bitcoin address. It’s kinda like how you need a person’s phone number to send them a text or their email address to send them a message.
Understanding Bitcoin addresses is an essential part of making transactions, especially when you’re ready to take self-custody of your bitcoin. While Bitcoin exchange businesses make it easy to buy and hold bitcoin without directly interacting with Bitcoin addresses, when you’re sending to an external wallet (either your own or someone else’s), you’ll need to understand how addresses work.
So what is a Bitcoin address?
A Bitcoin address is a long sequence of seemingly random numbers and letters that serves as a destination for a bitcoin transaction. They start with one of three common prefixes, depending on the format: “1”, “3”, or “bc1”. Here’s some examples of how they look.
1BgXRx8YMGKU7fc8RfTPQ2uL2ivC9cMmGj
3G3CxtfN4rg4ShVzVAUsM3AtGbnbs6v26S
bc1qsfc2g86agexaht5eh8yfp3xs9q65nhnz85dq8u
Despite the differences in length or format, all Bitcoin addresses function in the same way: receiving bitcoin transactions. By viewing any given block on Bitcoin’s public blockchain, you can see for yourself the amounts of bitcoin being sent and the respective addresses they’re being sent to.
Bitcoin addresses are also commonly shared as QR codes, which is just a computer-readable format that can be easily scanned with a phone or computer. Scanning QR codes is useful for avoiding mistakes when typing or copying these long addresses.
Bitcoin addresses are generated from a public key, which itself comes from a private key–a long sequence of numbers and letters that serves as the basis for authorizing transactions. Private keys are like the secret codes that unlock your bitcoin when you want to spend, and therefore only you should have access to them.
When you use a custodial bitcoin service like Strike, address creation and management are handled for you. When you’re ready to take self-custody of your bitcoin, understanding how Bitcoin addresses work becomes paramount.
Here’s the basics of how a Bitcoin address works:
The final product is a Bitcoin address that can be shared publicly for receiving payments, without compromising the secrecy of the private key. When you want to spend the bitcoin that was sent to your address, you can authorize a transaction using the private key that was used to create your Bitcoin address.
There are four basic types of Bitcoin addresses. They all work similarly, but differ in their formatting and compatibility with different wallets and platforms.
Depending on your wallet app, you can manage your bitcoin addresses, including the selection of which address type to use.
Whether you’re sending or receiving on the Bitcoin blockchain, you’ll need to use a Bitcoin address. Within the Strike app you can send to or receive from a Bitcoin address, using either your bitcoin or cash balance, and Strike will convert the funds before completing your transaction.
While each Bitcoin wallet app is different, they typically follow the same procedure:
For both sending and receiving, once a transaction is broadcast by the sender’s wallet, the transaction will be added to a block on the blockchain, typically within minutes depending on the sender’s fee paid. The recipient’s wallet will monitor Bitcoin’s blockchain and detect the new transaction that is destined for one of its Bitcoin addresses. Once the transaction has been “confirmed” by being added to a block on the blockchain, the recipient’s wallet balance will be updated to reflect the received bitcoin.
After this process, the recipient now owns the bitcoin, since the only way to spend that bitcoin is by authorizing a new transaction using the private keys that were used to create the Bitcoin address. Depending on the wallet, you might have to wait for 1-6 blocks to pass (~10-60 minutes) before the transaction is considered finalized.
Once a bitcoin transaction is added to the blockchain, it’s permanent and cannot be reversed. This makes it crucial to double-check where you’re sending your bitcoin and to ensure you trust the recipient. Unlike bank transfers, there’s no way to recover funds after sending bitcoin, which is especially important to remember while being vigilant and wary of potential scams.
To learn about managing your bitcoin addresses learn about address management best practices.
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