Bitcoin Explained #3

Bitcoin Addresses - Your Digital Postal Address

A Bitcoin address is like your postal address for receiving digital money. It's a shortened, user-friendly version of your public key that people can easily share and use.

How addresses work:

Mathematically derived from your public key through hashing

Much shorter than public keys (26-62 characters vs 66 characters)

Safe to share publicly - anyone can send Bitcoin to an address

Come in different formats: Legacy (1...), SegWit (3... or bc1...), Taproot (bc1p...)

QR codes make them easy to scan and share

Real-world analogy:

Think of your public key as your full legal name on official documents, and your Bitcoin address as a nickname everyone uses. Both identify you, but the nickname is easier to remember and share. Just like you might use different nicknames in different contexts, you should use different Bitcoin addresses for different transactions.

The privacy angle:

Your wallet can generate unlimited fresh addresses from the same public key. Using a new address for each transaction is like having a different P.O. Box for each package delivery - it prevents people from linking all your transactions together.

Why fresh addresses matter:

Reusing the same address is like using the same mailbox for everything - eventually, people can track all your financial activity. Fresh addresses = better privacy.

Bottom line: Bitcoin addresses are your public receiving points, but using them smartly protects your financial privacy.

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