Your wallet address is a unique string of numbers and letters (also known as a public key) that people can use to send you cryptocurrency and that is used to verify transactions on the blockchain. That is correct but that’s not all there is to a wallet address.
This article will highlight how a wallet address works and other vital pieces of information you need to kick off your cryptocurrency journey.
What Is A Wallet Address?
A cryptocurrency wallet address is the identifying string of characters associated with a person’s crypto assets in the world of cryptocurrency. It functions similarly to an email address linked to your own email account in that it allows holders to send and receive information.
You can send cryptocurrencies or digital assets to another trader on the same blockchain by using your wallet address. You can also give someone your wallet address so they can send you assets.
Wallet addresses are difficult for humans to remember and interpret due to their complexity. Computers, on the other hand, have no trouble storing and instantly recognizing them. As a result, in a fully digital ecosystem, they serve as useful markers of identity.
How Wallet Address Works
A blockchain, which is a ledger made up of blocks (groups) of transactions, is where cryptocurrency is stored. Wallet addresses are used to transfer cryptocurrency from one blockchain account to another. We may need to go over a few other aspects of blockchain wallets to explain how that works.
Public keys and Private keys are used in blockchain wallets, also known as crypto wallets. The public key functions similarly to an account number through which other users can send transactions. Similar to a password, the private key grants access to cryptocurrency funds in that account.
A wallet address is essentially a hashed version of the public key. The blockchain wallet hashes the public key to generate the address, which is a string of characters that represents that public key. Transactions sent to the address are effectively directed to the public key, ensuring that they reach the intended recipient.
There is one very important rule to remember when it comes to wallet keys. You can share the public key of your wallet, but never the private key. Because the private key grants access to the account, anyone who has it has the ability to steal your cryptocurrency.
Although blockchain wallets and wallet addresses may appear complicated, they can be simplified by going over how a wallet address works from beginning to end.
Suppose you have a blockchain wallet and want to receive Bitcoin. You could share the public key, but it’s more common to share the wallet address. So, in your wallet, you’d choose the cryptocurrency you’d like to receive. The wallet would then hash its public key in order to generate an address for Bitcoin. You could give anyone who wants to send you Bitcoin your wallet address.
You’d also be able to send yourself Bitcoin if you had it on a cryptocurrency exchange and wanted to transfer it to your own wallet. Most cryptocurrency exchanges, by default, store your cryptocurrency in their own custodial wallets that they control. Moving crypto to your own wallet puts it fully in your control.
Wallet addresses may or may not change each time you generate them, depending on the cryptocurrency. Each address you generate with some cryptocurrencies, such as Bitcoin, is unique. Previous addresses are still associated with your account and can be reused. Wallet addresses for other cryptocurrencies, including Ethereum, do not change.
Wallet Address Format
The format of a wallet address varies according to the cryptocurrency. Most blockchain wallets support multiple types of cryptocurrency and generate different addresses based on the cryptocurrency received. We’ll go over a few examples of addresses to give you an idea of what they look like.
Bitcoin wallet addresses range in length from 26 to 35 characters and contain both letters and numbers. They begin with “1,” “3,” or “bc1.” An example of a Bitcoin address is as follows: 1Lbcfr7sAHTD9CgdQo3HTMTkV8LK4ZnX71.
Ethereum addresses are hexadecimal addresses with 42 characters. They are generated by appending “0x” to the front of the last 20 bytes of the wallet’s public key. An Ethereum address looks like this: 0x1ABC7154748D1CE5144478CDEB574AE244B939B5.
Crypto addresses are slightly easier to distinguish on the Avalanche blockchain. They employ a Bech32 addressing format, with each virtual machine having its own distinct identifier.
The Avalanche C-Chain, for example, has addresses that begin with “C,” the Avalanche P-Chain has addresses that begin with “P,” and the Avalanche X-Chain has addresses that begin with “X.” The wallet address is then immediately followed by “avax1,” indicating to users that they are transacting on the Avalanche blockchain.
Stellar is a blockchain network with addresses that operate in a unique manner. The public key of the wallet is the same as the standard Stellar address. GBH4TZYZ4IRCPO44CBOLFUHULU2WGALXTAVESQA6432MBJMABBB4GIYI is a 56-character string that begins with a G.
Stellar also has a federation protocol, which enables users to generate federation wallet addresses. A federation address is similar to an email address in that it contains both a username and a domain. “username*domain” is the format. For example, if you use the stellar.org domain and the username “xlminvestor,” your federation address would be: xlminvestor*stellar.org.
Wallet Address on Public or Private Blockchain
A wallet address’s visibility is determined by whether the blockchain is public or private. Public blockchains, also known as permissionless chains, are entirely open to the public. They adhere to the decentralization concept, allowing anyone to add blocks to the chain. Some of the world’s most well-known chains, such as Bitcoin and Ethereum, are open to the public.
Wallet addresses on public chains are visible to other users. This does not imply that your personal identity is revealed, as most chains allow for anonymity. People will not know who owns the wallet address, but they will be able to see that it exists on the network. They will also be able to view the wallet’s transactions and account balance.
Private blockchains are ledgers that are managed by centralized authorities. While this centralization goes against the ethos of many in the crypto world, it aids in speed, trust, and efficiency. Hyperledger and Ripple are two well-known private chains.
Because of the centralized nature of private chains, wallet addresses do not have to be made public. The central administrators are ultimately responsible for managing the wallets on the chain.
While this may make private blockchains appear appealing, they are more difficult to join than public chains. To join them, you must first obtain permission from the central authorities. While this is sometimes possible, it is dependent on the project’s goals and your own plans as a trader.
Conclusion On Wallet Address
Using wallet addresses is an important aspect of cryptocurrency management. Risk management is essential if you’ve decided to invest in cryptocurrency. Because the cryptocurrency market is so volatile, stick to long-term investments and only spend money you can afford to lose. Take some time to review how to store cryptocurrency so that your funds are safe.