What is a Bitcoin Address and How to Get a Bitcoin Address

Bitcoin is still the most popular and expensive cryptocurrency out there, and to use it, you need a special address called a Bitcoin address. This is like a unique identifier that lets you store and receive Bitcoins. 

In this article, we'll learn more about what a Bitcoin address is, how to create one, and how to use it correctly. We'll also talk about why you might need to change your address from time to time, and how to safely store old addresses. 

What is a Bitcoin address

A Bitcoin address looks like a unique sequence of Latin letters and numbers. The address is used to uniquely identify the recipient of the transaction and indicate where exactly the coins should be transferred.

Each address is generated based on a private key using a specific algorithm and corresponds to one Bitcoin wallet. Generation occurs using cryptographic methods based on a private key: it is known only to the owner of the wallet.

Examples of Bitcoin addresses:

1Cdid9KFAaatwczBwBttQcwXYCpvK8h7FK

bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

In hexadecimal, all addresses are the same size - 160 bits, which corresponds to 20 bytes.

To get your first Bitcoin address, just go to any popular wallet generation service: Electrum, Blockchain.info, Coinomi, or generate an address through a crypto exchange. These services allow you to generate a pair of keys - private (private) and public (public). The public key is converted into an address using an irreversible one-way hashing function, which can be used to receive transactions.

Types of Bitcoin addresses

There are 3 main formats for Bitcoin addresses:

1. Legacy (beginning with the number 1) is the oldest and most common address format. They can be recognized by the first digit 1. For example:

1BWwXJH3q6PRsizBkSGm2Uw4Sz1QZ5sCj

1N4XyL4chA3oB9aP3sg3im3nFXcUkYN6R3

Created by default wallet programs since 2013. They are easier to use, but are vulnerable to hacker attacks, hacking, and so on.

2. P2SH (begins with the number 3) – multi-signature addresses that allow you to transfer funds if the transaction is signed by several participants. Starting with the number 3:

3QJmV3qfvL9SuYo34YihAf3sRCW3qSinyC

3Xi1AFp4ofHash5SbGbLHjB6e8dkxaY2v5

They provide additional flexibility and a higher level of security, but require additional knowledge from the owner, in particular, managing private keys. Introduced in 2012.

3. Bech32 (starting with bc1) is a new address format proposed by Bitcoin developers in 2017. It is highly reliable because it uses an error correction code. Examples:

bc1q0jnggjwnn22vnkytdajfsphzvfjuk71640tha

bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6

They have additional security due to their resistance to user errors, but are not yet so widespread and are not supported by some older services.

Why do you need to change Bitcoin addresses?

Many experienced Bitcoin users recommend changing addresses periodically. There are several reasons for this:

First, it improves privacy by making it difficult for outside observers and intelligence agencies to track all your blockchain transactions. Each address is used only once.

Secondly, periodically changing addresses increases the overall level of security, since even if one of the addresses is compromised, attackers will not be able to get to the entire balance of funds. It is recommended to change addresses after 5-10 transactions.

Thirdly, the use of new addresses allows for better structuring of transactions in the wallet, for example, dividing funds for storage, exchange, and investment.

Ideally, it is recommended to generate a new address for each transaction, especially when working through unverified services. However, in practice, it is more common to change addresses once every few months.

How to create a Bitcoin address

There are several ways to obtain a Bitcoin address. Let's look at the simplest and safest methods:

1. Using an online address generator is the easiest way to get a Bitcoin address. Just go to a special website, for example BitAddress, generate an address and copy it to the clipboard. However, this method is not safe for storing large amounts due to low security.

2. Creating an address through a crypto exchange is the most popular method, suitable for beginners. It is enough to go through a quick registration and, in some cases, verification on the platform. The disadvantage is obvious - the cryptocurrency that is stored on the exchange is not your cryptocurrency. This method of storing Bitcoin is not safe, since the site may suddenly stop operating or restrict access in your specific region. After this, it will be difficult to regain access to your funds.

3. Generating an address using a local wallet on a computer, laptop or mobile phone - this method is quite safe, provided that precautions and backups are taken. To do this, you need to install a special wallet application, launch it and follow the instructions to create a new address. Popular Bitcoin wallets that you can use are Electrum, Exodus, Mycelium.

4. A “wallet on paper” is the most reliable way to store Bitcoins in terms of anonymity. To do this, using special services, a paper medium with private keys is generated. Your main task is to ensure that this paper is properly stored, such as a safe.

5. The use of hardware crypto wallets based on electronic devices (hardware wallets) - this method, perhaps, provides the most maximum protection of keys, subject to compliance with security rules. These are flash drive-like devices that generate and store keys. We recommend using: Ledger, Trezor, Keepkey.