What is a Bitcoin address?
A Bitcoin address is a unique identifier consisting of alphanumeric characters that “holds” bitcoin currency and it is used to send and receive bitcoins. Simply put, this address is similar to an email address in that it is safe to reveal it to others. Sending someone bitcoin is easier than sending an email because there is no message to write. There is no need to learn the complexity behind sending an email, as there is no need to do so to send or receive Bitcoin.
Two Forms of Bitcoin Addresses
To fully understand what a Bitcoin address is, you need to know the key concepts that make bitcoin and the blockchain work:
- Public Address: unique identifier for your account on the blockchain. Viewable by anyone, safe to share.
Like your email address.
- Private Key: a long 64-character code using a combination of the letters A-F and numbers 1-9 that is used to prove you are the owner of the address. It allows you to send bitcoin using your public address. It needs to be 100% secure and private.
Like your email password.
Isn’t Bitcoin Anonymous?
Well, it is and it isn’t. The key to using Bitcoin is that you are completely anonymous until someone attaches your identity to your public address. For example, if you send bitcoin to my public address, and I send it from that address to my Coinbase account – I have just attached my profile data on Coinbase to that public address. Since you sent it to my address, you may also know my identity.
Anyone can view the current balance of any Bitcoin address without any login or password on the Blockchain. You can see the date and amount of every transaction, as well. This is why it is smart to generate new addresses for different transactions. Wallets can generate an unlimited number of addresses and they all will work regardless of how many are created. What you won’t see are any names, physical addresses, or other personal data.
Bitcoin Wallet Lookup Tools
There are numerous tools online to lookup Bitcoin wallet addresses. You might check an address to see if there have been scam alerts connected to it, or to report a scam. You can also check to see if a bitcoin address is still valid. Here are some commonly used tools to explore use for bitcoin address lookups:
After a bit of exploration, you’ll quickly see that a bitcoin address does not reveal any identifiable details. Unless you provide an avenue for discovery by connecting your wallet to an account for which KYC (Know Your Customer) data was required, it is impossible for your identity to be known. there are a few companies that specialize in blockchain forensics to figure out the identity of wallets.
There are steps you can take to keep your Bitcoin address untraceable. All Bitcoin transactions remain on the Bitcoin network and are public. Here are some effective suggestions to improve privacy and security:
- Every Bitcoin wallet has a unique address and to prevent being tracked, you could use multiple wallets. Note that multiple addresses are not the same as multiple wallets. A wallet can create an unlimited number of addresses – but it is still the same wallet and all addresses lead back to it.
- Never publish your Bitcoin addresses online on social media or websites. Doing so instantly connects the wallet to your identity.
- Use a VPN to hide your IP address and prevent your browsing history from being tracked. This keeps the logging of your transactions from being connected to your IP address to discover your identity.
- There are services that specialize in mixing your address with those of other users, which makes it difficult to identify you by disrupting the link between your personal wallet and the receiving address.
- Use DuckDuckGo instead of Google to search the web. You’ll get tracker blocking, private searching, increased encrypting, and privacy grading on your browsing.
- Update your software on whatever device you use in order to employ the latest, safest versions.
- Adjust your privacy settings to ensure only the apps you want to have your location are enabled to do so.
- Use a secure password manager to create safe, unique passwords – like 1Password.
- Use 2-factor authentication wherever possible. Authy works great across multiple devices, unlike Google’s app which causes problems if a device is lost or stolen.
Because you can see all transactions that occur on the Bitcoin network, multiple Bitcoin addresses can be grouped together, then tied to the same address. If only one of these addresses is linked to a real-world identity, then all of them can be de-anonymised using various methods.
Difference Between a Bitcoin Address and Bitcoin Wallet
A Bitcoin address and a wallet are two different things. The address is the ID of where the Bitcoins are held. The wallet is a program controlling the address and facilitating transfers to and from that address or addresses. The wallet is a collection of private keys that correspond to those addresses.
Each address contained in the wallet is checked by the Bitcoin software to determine balances and transactions associated with them on the Blockchain, then calculates the total balance. So, if there are 10 addresses for one wallet, all ten are checked for balances and transactions which are visible in the wallet.
Think of it like this: the wallet is the key ring, and the address is a key on the ring.
Bitcoin is pseudonymous, which is different from being anonymous as many believe. Because the blockchain is public, a bitcoin address lookup can easily be performed to view all transactions recorded for a wallet. The Bitcoin blockchain is permanent, with encrypted transactions that use public-key cryptography to mask the identities of individuals behind the transactions. This is why Bitcoin is pseudonymous.
In each transaction, each user is assigned two digital keys; one public key (address); and one private key (known only to the user). Users who rely on trading exchanges such as Binance, Bitfinex, etc. have to divulge their personal data to create an account. Some online wallet software stores user data and ties it directly to a collection of public and private key pairs. It is also possible to use network analysis, bitcoin address lookup, and other methods to observe and potentially tie back blockchain transactions to certain websites and individuals.
Bitcoin is a decentralized and unregulated payment method, and users should understand this does not mean that bitcoin transactions are anonymous and hidden from scrutiny. Enhance privacy by using a new bitcoin address for every transaction. Take additional precautions to minimize the risk of traceability to third-party exchange accounts. Avoid storing bitcoins in online third-party wallets, using only offline desktop wallets to reduce exposure to exchange hacks.
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