Bitcoin keys and addresses are a string of unique numbers used to send and receive Bitcoin on the network.\u00a0<\/p>\n
Keys and addresses function like a checking account at a bank similar to your checking account number<\/strong> and account password<\/strong>.<\/p>\n Your public key<\/strong> is your account number.\u00a0<\/strong><\/p>\n Your private key<\/strong> is your account password.\u00a0\u00a0<\/strong><\/p>\n Your address<\/strong> is like your Venmo or Zelle @handle<\/strong> that functions like your account number <\/strong>that is given to the sender who creates the transaction.<\/p>\n Your private key<\/strong> is like a password<\/strong> that secures the Bitcoin and is used to sign a transaction which prevents people from sending Bitcoin from your wallet to their address<\/strong>.\u00a0<\/p>\n A private key <\/strong>is also called a secret key or (SK-secret key).<\/strong><\/p>\n Private keys are randomly generated 256-bit numbers<\/strong> generated by a SHA-256 algorithm.\u00a0 The number \u2018256\u2019 in SHA-256 represents the number of hexadecimal characters produced as an output of the algorithm which represents the data that was encrypted.\u00a0\u00a0<\/p>\n Since Bitcoin Core is a computer program run by all nodes, the software must be able to read the information.\u00a0 Computers like to use Binary<\/strong>, elemental numbers (1s and 0s) to store data in bits.\u00a0\u00a0<\/p>\n In the example below, Hexadecimal (hex) and Decimal numbers can be converted to Binary.\u00a0 These conversions from one format to another are interchangeable and all represent the same<\/strong> private key.\u00a0 Note<\/strong>: Never share your private key with anyone!<\/p>\n Your private key<\/strong> is used to sign a Bitcoin transaction<\/a> on the network and unlock<\/strong> your Bitcoin UTXO<\/a>s to spend.<\/p>\n If someone has your private key they can drain (sweep) Bitcoin from your account.\u00a0\u00a0<\/p>\n Self-custody of your private key<\/strong><\/a> <\/strong>is a fundamental right and responsibility of Bitcoin investors. Non-custodial wallets enable you to become your own bank and serve as an alternative solution to 3rd party custodial wallets, like an exchange, used for private key management.\u00a0<\/p>\n If you are using an exchange wallet (Coinbase) or software wallet (MetaMask)<\/a>, then you do not<\/strong> control your private key.\u00a0 The \u2018hot wallet\u2019<\/strong> provider is acting as the custodian.\u00a0<\/p>\n Private keys stored offline in cold storage<\/a> transfers the custodial risk<\/strong> (hacks, theft, negligence) away from the third party hot wallet provider directly to you.\u00a0\u00a0\u00a0\u00a0<\/p>\n Most wallet services (hot and cold) provide a way to backup and restore your private key<\/strong><\/a> by providing you with a recovery seed phrase<\/strong> (12-24 words) that represents your 256 bit private key.<\/strong><\/p>\n Generating a private key is like creating a new bank account to send and receive Bitcoin.\u00a0\u00a0<\/p>\n To create a new bank account at Chase you have to fill out a form, provide ID, and receive permission from the bank before you\u2019re given an account number.\u00a0\u00a0<\/p>\n At any time, for any reason that same bank could freeze or cancel your account preventing access to your funds at the directive of the government or an employee.\u00a0\u00a0<\/p>\n Creating a private key<\/strong> doesn\u2019t require anybody\u2019s permission and effectively creates your own \u2018account\u2019 on the Bitcoin Network.\u00a0 Being your own sovereign bank is liberating and a fundamental right offered by Bitcoin.<\/p>\n You can manually create a private key without a wallet provider simply by generating a 256-bit random number<\/strong>.\u00a0\u00a0<\/p>\n Here are a few examples of how to generate a private key<\/strong>:<\/p>\n Flip a Coin 256 times.\u00a0 SRSLY.\u00a0 Get a piece of paper, a pen and a coin.\u00a0 For each flip, if the coin lands on \u2018heads\u2019 record a \u20181\u2019 and if the coin lands on \u2018tails\u2019 record a \u20180\u2019.<\/p>\n You now have a private key in binary format.\u00a0 You can follow these technical instructions to create<\/a> a public key<\/strong> then a corresponding Bitcoin address.<\/strong>\u00a0 None of these steps require approval by any authority.<\/p>\n If you can code, use something like Python\u2019s random number generator which will spit out a private key in decimal which can then be converted to binary and\/or hexadecimal.<\/p>\n Another option is an online random number generator, like BitAddress<\/a>, to generate a private key.\u00a0 If you choose this option, stay alert and do your own research since you risk a bad actor (site owner) saving your private key and draining your wallet.\u00a0\u00a0<\/p>\n A software (hot) wallet can create and store your private key.\u00a0 You will be provided with a backup and recovery seed in case you get locked out of the account or want to transfer services.\u00a0\u00a0\u00a0<\/p>\n A cold storage hardware wallet<\/strong> will also generate, encrypt and store a private key.\u00a0 Hardware wallets, like Trezor and Ledger,\u00a0 make the process really simple by providing a backup\/recovery seed and an interface to send\/receive Bitcoin.\u00a0\u00a0<\/p>\n Yes, if someone happens to generate the same random 256-bit private key, called key collision, they could technically sweep all of the Bitcoin from your account.\u00a0\u00a0<\/p>\n It\u2019s exponentially more probable for someone to have the same fingerprint <\/a>than it is for a collision event <\/strong>of two people having the same private key.\u00a0\u00a0<\/p>\n You\u2019re far more likely to lose your recovery seed phrase.<\/p>\n Adding a passphrase to your Bitcoin wallet backup<\/a> adds another layer of security.<\/p>\n If you\u2019re still skeptical about self custody the alternatives include storing BTC on Centralized Custodial Exchanges, like Coinbase, or learning how the Bitcoin ETF works<\/a>.\u00a0\u00a0<\/p>\n The public key (PK)<\/strong> is your account number.\u00a0\u00a0<\/p>\n It\u2019s going to be seen by other people.\u00a0\u00a0<\/p>\n For example, in real life when you pay a utility bill (gas, water, electric) the paper check that you mail back lists your bank account number<\/strong>.\u00a0 Bob, who works in the accounts receivable department at the electric company, opens your check and can see your account number because it\u2019s public.\u00a0<\/p>\n When you transact with Bitcoin, your public address<\/strong> is going to be seen by other people or companies who are using a blockchain explorer<\/strong><\/a>.\u00a0<\/p>\n A public key is cryptographically derived from your private key using SHA-256 and RIPEMD-160 hash functions <\/strong>(algorithms) and stored as a hexadecimal value.<\/p>\n The public key<\/strong> is used during a transaction to programmatically lock the Bitcoin UTXO sent to your public<\/strong> address<\/strong>.<\/p>\n (h3) How can I get the public key from the private key?<\/strong><\/p>\n Your public key<\/strong> is derived from your private key <\/strong>using a math function, an elliptic curve multiplication<\/strong><\/a> (aka \u2013 Elliptic Curve Digital Signature Algorithm or ECDSA.)<\/p>\n The public key (PK)<\/strong> is a one-way function of the private key (SK) <\/strong>with a cryptographic \u2018trapdoor\u2019 to disallow a private key being derived from the public key.\u00a0<\/p>\n Your public key + digital signature<\/strong> proves that you own your Bitcoin without having to disclose your private key to anyone when making a Bitcoin Transaction.<\/strong><\/p>\n Your Bitcoin Address is a shortened<\/strong> version of your public key <\/strong>that is easier to interact with.\u00a0<\/p>\n It functions like the @handle<\/strong> you share with others on peer-to-peer instant banking systems like Zelle, Venmo, <\/strong>and Paypal<\/strong>.<\/p>\n Your Bitcoin public address<\/strong> is computed from the hash of your public key<\/strong>.\u00a0\u00a0<\/p>\n Bitcoin software uses the two hash functions <\/strong>(algorithms), RIPEMD-160 and SHA-256<\/a>, to generate the public<\/strong> bitcoin address<\/strong> derived from the public key.<\/strong><\/p>\n The recipient\u2019s<\/strong> public address<\/strong> receives Bitcoin from the sender\u2019s public address.\u00a0<\/strong><\/p>\n Keys and addresses are used in multiple functions aside from just being identifiers of the senders and receivers.\u00a0\u00a0<\/p>\n For example, 3 technical functions of a Bitcoin Key Pair<\/strong> are:<\/p>\n GenerateKeys ()<\/strong> \u2013 you make a key pair by generating a random secret (private) key and a public key which are used to create a wallet and public addresses.<\/p>\n Sign(secretKey, message)<\/strong> \u2013 the holder of a secretKey can sign a message which creates the signature.\u00a0<\/p>\n Verify<\/strong>(publicKey, message, signature) \u2013 anyone with a public key can verify the message + signature which returns a boolean response true\/valid =(1) or false\/not valid (0).<\/p>\n You can verify this with a blockchain explorer and our guide on how to decode a Bitcoin transaction<\/a>.<\/p>\n H2 Bitcoin Address Formats<\/strong><\/p>\n Bitcoin addresses come in a variety of different formats which can impact the size of the data required to lock or unlock UTXOs spent and received in a transaction.\u00a0\u00a0<\/p>\n Your wallet address has a direct impact when calculating the size and cost of a transaction<\/a>.\u00a0\u00a0<\/p>\n Pay-to-Pubkey-Hash Legacy Address (P2PKH<\/strong>) is the original address and uses the most data.\u00a0 It\u2019s a hash of the public key from the private key.<\/p>\n Example: 1<\/strong>e16hWo7CShMgbAfo9c3Ykj5C7BLq7Hot (starts with 1<\/strong>)<\/p>\n Pay-to-Script-Hash (P2SH<\/strong>) ~25% smaller than P2PKH conditional spending address because they do not use hash of the public key but a script instead.<\/p>\n Example: 3<\/strong>5NShWo7CShMgbAfo9c3Ykj5C7BLq7Not (starts with 3<\/strong>)<\/p>\n Pay-to-Witness-Public-Key-Hash Native SegWit<\/strong> \u2013 Bech32 (P2WPKH<\/strong>) addresses use ~38% less data than legacy and most common address because the sig is not within transaction (in the witness token) and a checksum to detect and correct errors.<\/p>\n Example: bc1q<\/strong>53lja80elem1anu9q9s4h2n7908re0jax667qdd (starts with bq1q<\/strong>)<\/p>\n Pay-to-Witness-Script-Hash (P2WSH<\/strong>) \u2013 this is the SegWit upgraded version of P2SH and also uses bech32.\u00a0 Easy to send, complicated and expensive w\/ fees for the receiver\u2019s address if it\u2019s P2WSH due to the scripting.\u00a0 (starts with bq1q<\/strong>)<\/p>\n Taproot (P2TR<\/strong>): A pay-to-taproot most advanced security, privacy, flexibility and scaling for Bitcoin enabling smart contracts introduced in 2021 to improve privacy and multi-sig.<\/p>\n Example: bc1p<\/strong>w508d6qejxtdg4y5r3zarvary0c5xw7kv8f3t4 (starts with bc1p<\/strong>)<\/p>\n You don\u2019t have to memorize all of these wallet types when you\u2019re mastering Bitcoin<\/a>.\u00a0 Just like you don\u2019t need to know that a bank wire transfers through SWIFT or that it\u2019s an acronym for Society for Worldwide Interbank Financial Telecommunications.<\/p>\n All bitcoin addresses in a wallet are derived from a seed phrase and you DO NOT need a new seed for each address.<\/p>\n Crypto Exchanges, like Coinbase, are defined as Virtual Asset Service Providers<\/a> (VASPs) which are Money Service Businesses (MSBs) engaged in government classifications of specific financial activities.\u00a0\u00a0\u00a0<\/p>\n These definitions are tied to Anti-Money Laundering (AML) and with know-your-customer (KYC) laws based on different jurisdictions.\u00a0\u00a0<\/p>\n When your Bitcoin is kept on-exchange, the exchange manages your keys<\/a>.\u00a0<\/p>\n Coinbase creates different addresses<\/a> each time you request a new address to receive Bitcoin.\u00a0\u00a0\u00a0<\/p>\n These addresses are derived from your keys and are managed by the exchange.\u00a0\u00a0<\/p>\n Law enforcement agencies can subpoena the exchange to uncover all of the transactions that took place on the exchange.<\/p>\n Every time you want to receive Bitcoin on your Coinbase account a new address will be created.\u00a0<\/p>\n Let\u2019s say you receive 1 BTC total via 52 weekly transfers from an external wallet of ~0.0192 BTC each.\u00a0 Each week you generated a unique receiving address totalling 52 unique addresses generated from your Coinbase exchange account.\u00a0<\/p>\n If you decide to send your Coinbase balance to an external wallet, you create a transaction with the new wallet\u2019s public address.\u00a0 The transaction contains 1<\/strong> input UTXO <\/strong>of 1 BTC, NOT 52 separate inputs because Coinbase is a custodial service.\u00a0\u00a0<\/p>\n When transferring from an exchange to a different wallet address, the general public would not be able to associate your 52 transactions totalling 1 BTC.\u00a0 However, because you\u2019re using a KYC verified account, Coinbase could be subpoenaed by law enforcement and they would disclose the details of the 52 transactions because they manage your keys.\u00a0\u00a0<\/p>\n The most common ways to increase your on-chain privacy include:<\/p>\n Coin mixing \u2013 Different jurisdictions approach the legality of coin mixing so you should always DYOR.\u00a0 Some wallet providers perform this function by batching transactions together creating different outputs that are harder to track.\u00a0<\/p>\n Multiple Wallets \u2013 the more wallets you route your transactions through can increase your privacy as there is no way of knowing that you own all wallets. Hierarchical Deterministic HD Secret wallets using Passphrases create branches of different key sets <\/strong>which can appear disassociated but easily managed and restored by a single recovery seed<\/strong>.<\/p>\n Running a Full Node: The Bitcoin Blockchain is a network of nodes and anyone with an internet connection can run a full node of the Bitcoin Core software.\u00a0 If you run a node, you can create and broadcast your Bitcoin transaction.\u00a0 Your transaction will be difficult to distinguish from other transactions your node is simultaneously broadcasting thanks to the Bitcoin Core software.<\/p>\n These solutions are examples for educational purposes which may require advanced technical skills and an understanding of the risks involved.<\/p>\n Your recovery seed<\/strong> words are used to verify your ownership of the keys to recreate your wallet on another device or with a different wallet provider.\u00a0\u00a0<\/p>\n There is no cost or fees to do this.\u00a0<\/p>\n It\u2019s not uncommon to switch wallet providers until you find one that fits with your Bitcoin security and usability preferences<\/a>.\u00a0\u00a0<\/p>\n The most common reasons for importing your keys are:<\/p>\n Switching to a new software wallet provider<\/p>\n Restoring NEW hardware device due to loss or theft*<\/p>\n Changing hardware wallet to new model or device provider<\/p>\n Adding a \u2018contingency\u2019 device to your backup and recovery strategy<\/p>\n Creating a duress wallet or a decoy wallet<\/p>\n *If restoring to a new device due to a security concern like loss, theft or suspected vulnerability, it\u2019s best to restore then transfer your Bitcoin to a NEW wallet with a different recovery seed.<\/p>\n When you switch devices or providers, your keys never move from one wallet to another.\u00a0\u00a0<\/p>\n Your keys are simply replicated on the new device which can be used to send\/receive, spend with a merchant, buy more, swap with another coin or just HODL.\u00a0<\/p>\n Pro Tip: <\/strong>when you buy Bitcoin on an exchange, you don\u2019t control your keys and there is no recovery seed because the exchange is the custodian of your Bitcoin.<\/p>\n Wallet providers and device manufacturers have detailed instructions for importing keys with your recovery seed.<\/p>\n After successfully importing your keys, be sure to verify account balances and review the wallet providers options to backup and protect your funds.\u00a0<\/p>\n Changing wallets or upgrading cold storage devices is a great opportunity to implement a strategy for UTXO management and consolidation<\/a>.<\/p>\n\n\n Note: Stratus does NOT provide investment, legal or tax advice.\u00a0 All information in this article is for educational purposes and should not be interpreted as investment, legal or tax advice.\u00a0 The opinions expressed are those of the author for informational purposes and neither Stratus nor the author are liable for any errors, inaccuracies or omissions.\u00a0 Digital assets, such as cryptocurrencies or decentralized finance, present unique risks for investors.\u00a0 For investment, legal, tax, or other financial guidance you should consult your own advisor.\u00a0\u00a0<\/p>\n The post Bitcoin Keys and Addresses<\/a> first appeared on Stratus Crypto<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Bitcoin keys and addresses are a string of unique numbers used to send and receive Bitcoin on the network.\u00a0 Keys and addresses function like a checking account at a bank similar to your checking account number and account password. Your public key is your account number.\u00a0 Your private key is your account password.\u00a0\u00a0 Your address […]<\/p>\n","protected":false},"author":0,"featured_media":113901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-113900","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/113900"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=113900"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/113900\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/113901"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=113900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=113900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=113900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What is a Bitcoin private key?<\/strong><\/h2>\n
How do I generate a Bitcoin private key offline?<\/strong><\/h2>\n
What is a Bitcoin public key?<\/strong><\/h2>\n
What is a Bitcoin Address?<\/strong><\/h2>\n
QR codes are another easy way to share your address and receive Bitcoin:<\/h4>\n
Bitcoin Addresses on Crypto Exchanges<\/strong><\/h2>\n
Tracing Bitcoin Addresses:<\/strong><\/h2>\n
How do I Import my Keys to a New Wallet?<\/h2>\n