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Blockchain Address: How Bitcoin Public & Private Keys Work For Payments

What Exactly Is A Blockchain Address?

With many Baby Boomers and even some Gen X citizens only just coming up to speed on email addresses, many more are still wondering what a blockchain address might be. A person’s blockchain address is a fundamental derivative of the very nature of blockchain technology.

When Bitcoin first launched, it had an ability to send BTC to IP addresses. This feature existed to enable the average users to send BTC without the hassle of dealing with long addresses and public [cryptographic] keys. This loomed as an open invitation for criminals to intercept or otherwise tamper with payments, and the protocol was abandoned.

An IP address is better known to users, yet it represents exactly the kind of “address” a blockchain address acts as for enthusiasts. A blockchain address is similar to a bank account number, a SWIFT code or even a website URL – all of these being addresses or components of an address.

Their blockchain address is both anonymous and also identifies them as a destination or recipient. Addresses need not be concerned with format beyond user considerations, as all they need to do is correctly pinpoint a specific person or locale. When it comes to payments, the respective payee needs to be identified via his or her address.

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Blockchain addresses do differ, however, in a number of ways from traditional account numbers and other address conventions. They are decentralized – in other words, not tied into any entity other than the one, individual end user. In addition, every potential blockchain address is already in existence, coded into the blockchain build to be released upon mathematical extraction.

It can be simply summarized that on any given blockchain, users identify their participation in the blockchain through their address. While they remain nameless for the most part, authentication is not a necessary component of a trustless system. Running on inbuilt smart contracts, the blockchain cannot be corrupted. Seen from this point of view, the elementary and masked nature of blockchain addresses appears as an elegant solution.

The Beginning Of Blockchain Addresses On The Decentralized Ledger

Going into a slightly more technical history, when Bitcoin dumped the Pay To IP protocol, they introduced a Pay To Public Key Hash (P2PKH) address format. This remains the addressing system on the Bitcoin blockchain to this day. A conventional P2PKH has a total of 34 alphanumeric symbols and all begin with a “1.” For example, an address might read 1Y761KZXjcopfXpSMjH9g5MxDDTPi4zEWq. Just like an email or home address, this represents the person or persons one can expect to find there. Public keys are typically longer, some 65 characters and digits combined. Hold that thought.

Keys Public And Private

A public key is that component of blockchain’s build that is generated between users. Imagine that user A wants to message user B. User A can glean a system key (public key) with which to encrypt the message pointed at the recipient. In simple terms, when the message arrives at the address, a private key is then generated by user B to read it.

Private keys are small snippets of code that pair with the public key. This generates algorithms for text encryption as well as decryption. Speaking from the tech/layman interface, private keys are created during asymmetric key encryption as components of public key cryptography. If that sounds like a mouthful, a simpler statement might be that keys are used to encrypt and decrypt messages, for example, into a legible format.

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The generation of keys is, for the average technician, a background cryptographic operation. Every crypto wallet is able to generate keys through its engagement with the blockchain. Wading through more techspeak, the process starts with the collection of entropy in a user’s wallet. In the IT realm, entropy refers to the randomness stored by an app or OS and applied to cryptographic use.

As strange as it might sound in English, good sources for randomness make for good cryptography. Once a user’s wallet has collected entropy, it can generate an ECDSA private key, for example.

What Is It Exactly?

It’s the key algorithm employed by Bitcoin addresses. Called an “asymmetric signature algorithm” (and here we’ll start talking English again!) it lets transactions be signed through a private key, while the “signature” is then verified by a public key. ECDSA exists as a cryptographic methodology that enables users to prove they are the creator or correct recipient of a transaction through a digital signature.

To recap, user wallets employ mathematical calculations to generate a public key. In a nutshell, the whole system lets users travel one way – from private to public. There is no way a public key can be employed to sneak a private key. This is how the system works.

Public keys are out in the world and harmless without private keys that provide airtight security for users. The public key performs its functions, and the private key performs its own functions of identification, ironically accompanied by anonymity. Both are free of any central issuing authority.

Tweaking The Blockchain Address System

Any user owning a computer or mobile device will recognize that 65 symbols in a public key is a lot of typing. Quickly unwieldy, public keys also held the prospect of frequent typos having calamitous results.

In a further encapsulation of techspeak, the other issue looming was the potential susceptibility of public keys being broken through rapidly developing quantum computing. Were quantum computing ever to reach currently unimaginable levels, there is a possibility of it being able to break the ECDSA protocol. All of this brought about the development of a methodology that eliminated these risks by creating an address derived of the public key.

Not pure nightmare for newcomers, Bitcoin addresses have some very intuitive features. Addresses come with a checksum that avoids typing errors. Whenever a user pastes an address into their wallet, a brief calculation will determine whether or not the address is legitimate. In a last twist and a testament to blockchain’s elegance, any user holding the private key of an address is the sole signatory for transactions to that address.

Other users who know the address can also confirm a signature from a private key, without actually discovering that private key. A “public address”comes from a private key and it lets the owner enable others to send them cryptocurrencies at no compromise of their private key.

Other Cryptocurrencies’ Addresses

Bitcoin also has other advanced address types. P2SH addresses, for example, allow for multi-signature transactions. Similarly, other altcoins also employ the identical SHA-26, ECDSA, SHA-256 and RIPEMD160 protocols in order to generate addresses. For the purposes of understanding an blockchain address, while techies might squeal if one dares compare one system to another, the principle remains the same across the board, even if the algorithm changes.

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However, it is important to note that the method used to create an address can have implications on usability, privacy and security. For example, the checksum makes Bitcoin more usable since it avoids issues related to mistyping an address, while Monero’s view key is partially why it is as private as it is.

The most notable difference for the casual observer is probably that the RIPEMD160 hash, for example, affixes different prefixes to addresses. By way of an example, Litecoin addresses start with an “L” while Dogecoin addresses all begin with a “D.” One can imagine the extent of tweaking enabled with these basic building blocks.

Monero, for example, a coin that makes much of its strong anonymity, employs a different set of rules that provides their unique cloak. It is noteworthy that address generation can have impacts down the line, affecting security, privacy and overall usability.

Bitcoin’s checksum protocol makes it more intuitive and user-friendly than Ethereum, for example, on that point. Ethereum actively encourages its users to copy and paste addresses as, lacking the simple checksum protocol, its users can incorrectly pay a mistyped address and permanently lose their funds. By the same token, Monero’s “view key” is a large part of the altcoins superior anonymity, something that appeals to many users.

Blockchain addresses – no matter from where or exactly how they are derived – are best experienced through practical exploration. As a topic, it’s eminently logical when one is involved with cryptocurrency trading and transacting. Very much like one will forever remember someone’s home address after visiting, so too does the highly technical realm of cryptography become nothing but user logic once one has employed the tools it services.


L'articolo Blockchain Address: How Bitcoin Public & Private Keys Work For Payments proviene da #Adessonews Finanziamenti Agevolazioni Norme e Tributi.

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