If you are one of the millions who are now ready to join the digital revolution of cryptocurrency, it can be tempting to dive straight in. Unfortunately, rather than riding the wave of opportunity, a lack of understanding will probably leave you drawing in the ocean of blockchain technology.
You must find the answers to a wide range of questions before completing your first trade, investment, or transaction. The concept of a blockchain address should be one of the top items on your agenda. The following guide will answer all of your questions on the topic, such as;
There is some confusion as to whether other coins existed first, but it is commonly accepted that Bitcoin (BTC) was the first major crypto. Since its launch in 2009, it has served as a decentralized digital coin that can be sent and received in seconds. A blockchain is one of the key elements needed to facilitate those deals.
If you wish to store, send, or receive BTC or another cryptocurrency, you will need a dedicated blockchain wallet. You can think of this as a digital bank account.
The blockchain address is, as the name suggests, a unique address that is associated with your blockchain wallet. This crucial piece of information is subsequently connected to transactions where you send or receive digital coins. It is presented as an alphanumeric sequence.
However, while the blockchain wallet (which remains constant), the blockchain address is unique to each transaction code. The blockchain platform automatically generates a new blockchain address for you after each transaction. This measure is in place for added privacy as it prevents third parties from using the blockchain address to research any other trades you’ve made.
So, you will see multiple blockchain address codes associated with your blockchain wallet throughout your blockchain journey. It is actually possible to re-use an address for future transactions, but it isn’t really advised.
As the grandfather of crypto, Bitcoin started the process of using blockchain addresses. The standard format used for blockchain transactions is known as Pay To Public Key Hash, or P2PKH.
The alphanumeric sequence is usually set to 34 characters (although not always), and you can spot a BTC P2PKH transaction by the fact that the first character is a ‘1’. The other address formats are;
Different blockchains may use a slightly different format. For example, Bitcoin Cash (BCH) also uses ‘bitcoincash’ as a Cash Address Format. However, all of the top cryptocurrencies use the core fundamentals of the cryptographic algorithm and unique alphanumeric blockchain addresses.
You will probably need to research the exact details of the actual coin you wish to send or receive. Two of the most popular altcoins are Litecoin ‘L’ and Dogecoin ‘D’. In addition to the alphanumeric code, you may see your blockchain address presented as a QR code.
The blockchain address is a code that the cryptosystems will automatically check to ensure that digital coins are sent from the correct account and received by the proper account. The blockchain tech facilitates the transactions through the following steps;
The blockchain address is input at stage one and then subsequently plays a key role throughout the journey from sender to recipient. Due to the advanced technologies used, the process is completed instantly.
The first step to using cryptocurrency transactions is to create your blockchain wallet. The exact process will vary from one blockchain platform to the next. When using Bitcoin’s peer-to-peer service, the process is as follows:
It is that simple. You can also create a ‘shared wallet’ for when you want a joint account with a spouse or financial partner. Once you have a blockchain wallet, it is also possible to create sub wallets.
The blockchain address is created automatically by the cryptographic algorithm. The alphanumeric code, QR code, or alternative ways of showing the address will all link back to your wallet. As already stated, new addresses are automatically generated for each unique transaction, although advanced users may use the same address for transactions with the same sender/recipient.
In this sense, the address can play the role of a unique transaction ID or an email address that is linked to your wallet.
Despite the fact that there are millions of crypto transactions per day, the endless combinations of characters mean each blockchain address is unique.
The blockchain address is more important than a simple transaction ID because you will actually need it to send and receive funds.
A blockchain address includes a four-digit checksum at the end, which is made by hashing the result twice and taking the first four bytes. This result is subsequently checked, along with the prefix, by the processing systems whenever an address is copied into the transaction. The purpose of this is that it makes it impossible to send crypto to the wrong address due to a typing error. But it does mean that you need to access your current blockchain address.
To find your address on Bitcoin, you will click the ‘receive’ button at the bottom of your wallet toolbar. This will then present the blockchain address and QR code. Most of the popular altcoins use very similar processes.