Bitcoin addresses play a crucial role in transactions on the Bitcoin network, enabling users to send and receive Bitcoin (BTC) and other native assets without intermediaries.
This guide explores Bitcoin addresses—how they work, different address types, and how to create one.
How Bitcoin Addresses Work
A Bitcoin address is a unique alphanumeric string (typically 34–62 characters) that identifies a transaction destination on the blockchain. Most addresses start with 1, 3, or bc1.
Key Features:
- Derived from a wallet’s public key (a compressed, user-friendly version).
- Used to receive BTC (similar to sharing an email address).
- Can be displayed as a QR code for easy scanning.
How Transactions Are Verified:
- Addresses are generated using one-way cryptographic hashing (from public keys).
- Built-in checksum validation ensures correctness before sending funds.
- Reusable, but generating new addresses per transaction enhances privacy.
⚠️ Warning: Sending BTC to an invalid address results in permanent loss. Wallets like Xverse include address validators to prevent errors.
Types of Bitcoin Addresses
1. Legacy Addresses (P2PKH)
- Prefix:
1 - Script: Pay-to-Public-Key-Hash
- Pros: Original format, widely compatible.
- Cons: Higher fees, slower transactions.
2. SegWit Addresses (P2SH)
- Prefix:
3 - Script: Pay-to-Script-Hash
- Pros: Lower fees, supports Lightning Network.
3. Native SegWit (Bech32)
- Prefix:
bc1 - Script: Pay-to-Witness-Public-Key-Hash
- Pros: Improved error detection, efficient block usage.
4. Taproot (Bech32m)
- Prefix:
bc1p - Script: Pay-to-Taproot
- Pros: Enhanced privacy, smart contract support.
How to Create a Bitcoin Address (Using Xverse Wallet)
Step 1: Download Xverse
Available on iOS, Android, or as a Chrome extension.
Step 2: Set Up Wallet
- Choose "Create New Wallet".
- Back up your seed phrase and set a strong password.
Step 3: Receive BTC
- Click "Receive" to view your auto-generated address.
FAQs
Q: How many Bitcoin addresses exist?
Over 460 million, with ~46 million holding ≥$1 in value.
Q: Can I send BTC from Taproot to SegWit?
Yes—Taproot is backward-compatible with SegWit/Native SegWit.
Q: How do I identify a SegWit address?
Look for prefixes 3 or bc1.
Q: Which wallets support SegWit?
Xverse, Ledger, and Trezor all support SegWit.
Summary
Bitcoin addresses ensure secure, decentralized transactions. Modern formats (Taproot, SegWit) offer lower fees and advanced features.
Ready to explore Bitcoin? 👉 Download Xverse today.