The increasing demand for crypto spending, swap, and storage options has led to the emergence of numerous exchanges and wallet providers. A crypto wallet, typically a software wallet or a physical device, manages user holdings on the blockchain and has an alphanumeric address for securely sending and receiving cryptocurrency. These addresses, similar to email addresses, identify the wallet as the sending address during crypto payments.
So, what is a wallet address, and how to get a BTC wallet address, specifically? Discover in the article.
What Is The Wallet for Your BTC?
A crypto wallet is software or hardware used to manage funds on the blockchain, facilitating transactions like spending, sending, or receiving virtual money. A BTC wallet is like a digital bank account that allows users to manage their Bitcoin. Having a wallet gives users control over their digital assets, but it also comes with the responsibility of securing them.
Bitcoins are not stored in the wallet but rather on the blockchain, a digital ledger that records all balances and transactions. With a wallet, users can show that some coins belong to them, allowing them to manage and send these coins, similar to withdrawing money from an ATM.
A crypto wallet is a tool that enables users to interact with the blockchain. It serves as an intermediary between a user and their cryptocurrency holdings. All wallets have keys, which are needed to access a user's crypto assets.
A public key, like a bank account number, can be shared with anyone who wants to send cryptocurrency, while a private key, like a bank account PIN code, should be carefully safeguarded. When a user wants to send cryptocurrency, they input the destination wallet's public key and the desired amount. When a user wants to receive crypto, the transaction must be signed using the private key, depending on the wallet type.
Which BTC Wallet You Should Choose?
Wallets come in various forms, from user-friendly online web wallets to more complex offline hardware-based wallets.
Basically, they can be categorised into three groups: medium, connectivity, and custodianship.
In terms of medium, bitcoin wallets can be classified into software, paper, and hardware wallets. A software wallet app is a computer program or mobile app that holds private keys online and connects to the BTC network through trusted nodes, centralised services, or full nodes themselves. They come in three types: desktop, mobile, and web-based.
A hardware wallet is a small, portable devices that keep private keys isolated from the internet, providing extra security, but it is complicated and expensive. Paper wallets are created by downloading software and running it offline to generate a public/private key pair.
In terms of connectivity, wallets can be hot or cold. Hot wallets are accessible through the Internet or a web browser on a mobile device with Internet connectivity. Cold wallets lack Internet connectivity and are impossible to steal online. A hacker would need to steal the device to access it physically.
Crypto wallets are classified based on custody, with custodial wallets controlled by trusted entities like CEXs, allowing users to access their content via a web interface. However, custodial wallets carry the risk of hacking or losing all crypto.
Non-custodial wallets give users full control over their funds and private keys or seed phrases but also require them to take responsibility for their own security. There is no third party or custodian to keep crypto safe, and losing or forgetting a key or seed phrase results in no access to the crypto.
What Is A Bitcoin Wallet Address?
Blockchain wallets have two types of keys: public ones, which are like account numbers, and private ones, which grant access to cryptocurrency funds.
A wallet address for Bitcoin is a randomly generated string of characters used to receive transactions in a blockchain wallet. It is a hashed version of the public key, which is used to send transactions to the wallet. The wallet owner can generate an address at any time.
To receive Bitcoin, users select the desired cryptocurrency, and the wallet hashes its public key for Bitcoin. This creates a crypto wallet address, which can be shared with anyone who wants to send Bitcoin. Alternatively, users can send Bitcoin themselves, as most crypto exchanges store it in their own custodial wallets.
Wallet addresses may change each time a new address is generated, depending on the crypto. For Bitcoin, each address is unique, while ETH and some other coins do not change it.
It is completely safe to share your Bitcoin address with friends, family, or associates since your funds cannot be stolen by using your address alone — your private key is also needed, so it is crucial never to share the private key, as it allows anyone to access the account and steal virtual currency. Also, anyone who knows your Bitcoin address can track your balance and transactions through a Bitcoin block explorer.
Types of Addresses
Different networks use unique conventions for generating wallet addresses, which can quickly identify the crypto being used. Thus, Bitcoin addresses start with 1, 3, or bc1, while ETH addresses start with 0x and are 40 characters long.
There are four most common types of Bitcoin wallet addresses: Segwit, Legacy, Compatibility, and Taproot.
SegWit
SegWit addresses, starting with bc1q, are used to limit information storage and reduce fees by not keeping signatures and scripts within the transaction. This saves 16% over P2SH addresses and 38% over legacy addresses, which makes this type the most used standard for addresses.
Legacy
Legacy addresses, starting with 1, are less popular due to large transaction sizes. These addresses, also called P2PKH, were the only way to create addresses in Bitcoin's 2009 launch. They were the hash of the public key to the private key and were the most expensive type.
Nowadays, most users employ these addresses only if their old wallets are incompatible with newer addresses. Other types are used for all other cases.
Compatibility
Pay-to-Script-Hash (P2SH), or Compatibility, addresses enable specific functionalities, such as requiring multiple digital signatures before a transaction is authorised.
These addresses start with 3 and are not the public key hash but a script with hidden spending conditions. P2SH addresses can use SegWit to save transaction fees and are approximately 26% cheaper than using a wallet with legacy addresses. This script allows for more efficient and secure transactions.
Taproot
Taproot or BC1P addresses, starting with bc1p, offer enhanced privacy and unlock smart contract functionality.
Taproot addresses are not widely used yet, but the BTC network performed a soft fork in November 2021, enabling smart contract capabilities and improved privacy.
Taproot transactions are slightly larger than native SegWit but smaller than legacy addresses due to public keys. They save space for complex transactions and are cheaper to spend than SegWit, making them a suitable choice for low network fees and high fees.
Ethereum Address
ETH blockchain addresses, starting with "0x" and consisting of 40 characters, can be made legible using services like Unstoppable Domains to create a recognisable alias for an ERC-20 wallet address, which applies to ETH and other ERC-20 tokens.
How to Get A BTC Wallet Address
Locating your wallet address depends on the exact wallet you use, but the basic concept is pretty much the same for any wallet provider. So, let's find out how to get a BTC wallet address.
To obtain a Bitcoin address, you need to create a Bitcoin wallet. To create a new Bitcoin address, open your wallet and select the "Addresses" option. The wallet will generate a new address, typically a string of letters and numbers. This address can be shared with the sender or used for different purposes. Multiple addresses can be created to separate transactions or separate transactions for different purposes.
For example, to find a unique Coinbase wallet address, sign in to your account and go to Crypto addresses. Then, select a specific crypto from the Tradable assets drop-down and display the QR code or copy the address. You can also add a label to the QR code view.
On the mobile app, tap Receive and select the asset you want to receive. The QR code and address will populate, and you can scan or embed the code on your website.
Copy the address or sign a message with it. Multiple addresses can be associated with a single crypto asset as long as they are the correct type for the crypto.
Closing Thoughts
Bitcoin address types are crucial in the crypto ecosystem. Bitcoin's architecture allows funds from newer address types like Taproot to be sent to older formats like Legacy addresses. Each type represents a unique chapter in Bitcoin's evolution, and understanding these address types and knowing how to get a BTC wallet address helps users navigate the ever-evolving world of digital coins with confidence.
