A cryptocurrency address is a unique set of characters or figures that represents a wallet which is used to send and receive cryptocurrencies. An address indicates the location of a particular wallet on the blockchain. And most addresses are designed to be used only once to accept or send crypto.
A Bitcoin address, for example, is usually made up of 26-35 alphanumeric characters and typically begins with the number 1, 3, or bc1. If you want to send money to a friend via Bitcoin. Your friend’s Bitcoin wallet will generate a bitcoin address which allows you to send Bitcoin once to that address. Another address will be generated for another transaction. Unlike a crypto wallet, an address cannot hold a balance
Most blockchain addresses are public and you can view the transactions of a particular address via a blockchain explorer. You can also see the amount of assets that the address has. However, this isn’t possible to do on privacy-based blockchains like Monero and Grin.
Despite the fact that addresses can be seen by anyone, most of the addresses are anonymous or pseudonymous. This makes it difficult to identify the person who owns an address because they do not usually have their real name associated with it. However, there are cases where addresses and the owner’s identity is known: Such addresses are owned by exchanges and token project owners or founders.
Examples of Bitcoin addresses
There are three different types of Bitcoin addresses: Pay-to-PubKey-Hash (P2PKH, also known as Legacy address, Pay to script hash (P2SH) and Bech32. Not all wallets support all three address formats.
P2PKH addresses are the first Bitcoin address format. They begin with the number 1, and are case-sensitive. All wallets typically support legacy addresses. You can receive Bitcoin sent from a Segwit address to a legacy address. Transaction fees are higher for P2PKH addresses.
Pay to script hash (P2SH) addresses have a similar structure to P2PKH addresses, but start with a 3 instead of a 1. The format was introduced to support the Segregated witness (Segwit), an update to the Bitcoin protocol, which divided signature data from Bitcoin transactions. P2SH addresses have reduced transaction fees. They support transactions from Bech32 addresses and legacy addresses.,
Native SegWit, or Bech32 addresses, start with “bc1” and are not case sensitive. Native SegWit addresses fully support SegWit transactions, resulting in lower transaction fees.