Wallet address: definition & how it works

You want to send or receive cryptocurrencies – but what exactly are you providing? Sooner or later, you'll come across the term wallet address. In this guide, you'll learn how wallet addresses work, what they look like and how you can find your wallet address – whether you're using software wallets, hardware wallets or custodial wallets. We'll also explain what you need to consider for the security of the digital wallet and its address.

• A wallet address is like a digital account number that you need to send or receive cryptocurrencies such as Bitcoin (BTC).

• Depending on the type of coins or tokens and blockchain network, wallet addresses start with different numbers or letters and consist of a long string of characters.

• To find your wallet address, you need access to your wallet and can, depending on the type, view your wallet address via apps or software.

• As wallet addresses are public and therefore accessible to everyone, you should avoid using the same wallet address for multiple transactions whenever possible.

What is a wallet address?

A wallet address is a string of characters that you can think of like an account number. It's used to send and receive cryptocurrencies. The wallet address is generated from public keys and interacts with blockchain networks. This makes the wallet address a kind of bridge between the wallet and the blockchain. Each type of token or coin has its own wallet address.

What are wallet addresses used for?

You need a wallet address to carry out crypto transactions via blockchain networks. If you want to receive a cryptocurrency, the sender needs your wallet address. Conversely, you need the recipient’s wallet address if you want to send a cryptocurrency. Your digital wallet contains the public and private keys, a pair of keys that ensures security during transactions.

To send a cryptocurrency, you must insert the string or wallet address of the other user into your wallet app by copying it. There is also the option to scan a QR code provided by the recipient, which transfers the wallet address into your wallet app. Alternatively, you can enter the wallet address yourself. However, as it consists of 40 characters, it's easy to make mistakes when entering it manually.

Example: what does a wallet address look like?

A wallet address can consist of a long string of letters and numbers or a QR code. Depending on which cryptocurrency is involved and which blockchain network you're connected to, the wallet address also varies. For example, wallet addresses can differ even for the same cryptocurrency if they're on different blockchain networks.

Bitcoin (BTC) addresses on the Bitcoin network typically start with the numbers one or three, such as the wallet address 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa from Satoshi Nakamoto, to which the first Bitcoin block was mined in 2009.

On the Ethereum network, wallet addresses begin with "0x". Ethereum addresses are 42 characters long. Bitcoin addresses in this network can have a character string between 26 and 35 characters.

There are other blockchain networks whose initial letters or numbers indicate the respective network, such as the "D" for Dogecoin or the "T" for the Tron blockchain.

How do you find your wallet address?

To find your wallet address, you need access to your wallet. Depending on whether you have a software wallet, hardware wallet or custodial wallet, there are different ways to find the address of your crypto wallet:

• Software wallet

A software wallet is usually installed on your computer or smartphone as an app. The layout of the software varies depending on the platform or provider. However, you'll typically find your wallet address by opening your wallet and selecting a cryptocurrency and a network. You'll either be shown a crypto address or you can select the "Receive" option, which provides your wallet address in the form of a QR code or a string of characters.

• Hardware wallet

Hardware wallets are physical devices specifically designed to store and manage cryptocurrencies. Depending on the model of the hardware wallet, you can manage your coins and tokens in the app associated with the hardware device and also access your wallet addresses.

• Custodial wallet

Custodial wallets are offered by various crypto exchanges. These exchanges hold the respective public and private keys and are also, legally speaking, in possession of your crypto assets. If you have an account with one of these crypto exchanges, you can usually find your wallet address under menu items such as deposit, wallet or crypto addresses.

How secure are wallet addresses?

Wallet addresses are publicly visible on the blockchain. All transactions are also recorded there, meaning anyone can track the transaction history of your wallet address. Although the transactions are public, wallet addresses are not directly linked to the identities of their owners. This makes wallet addresses quite secure.

Nevertheless, there are sources of error and risk that every wallet owner should be aware of. For example, typos can occur when entering the wallet address to send cryptocurrency, which can lead to the loss of funds. If you copy a wallet address, there can be attacks from viruses that monitor the clipboard and replace the actual wallet address with that of a fraudster. QR codes can also be manipulated. Always check the amount before clicking “Send”. It's also not recommended to use the same wallet address repeatedly, as fraudsters can use the publicly visible transaction history to identify your wallet and attempt to steal your coins and tokens.

Conclusion: the role of wallet addresses in the crypto world

Wallet addresses are much more than just a technical necessity. They're the central point of every crypto transaction. Whether you're receiving assets, sending them or managing your digital wealth: nothing works without a wallet address. In the decentralised world of cryptocurrencies, they take on the role of the account number – only digital, more flexible and usable globally.

Frequently asked questions about wallet addresses

How are wallet addresses generated?

The first step on the way to a wallet address is the generation of a private key by the wallet software or wallet device. Next, a public key is generated from the private key, which is publicly accessible and used as an address. In the final step, the public key undergoes a cryptographic encryption process to create the wallet address.

What is the difference between public keys, private keys and wallet addresses?

The difference between public keys, private keys and wallet addresses lies in the fact that both the public and private keys have different functions and security roles compared to wallet addresses. A wallet address can be thought of like an account number that can send and receive cryptocurrencies. That's why a wallet address can be shared publicly. Keys, on the other hand, especially the private key, are secret codes that no one but you should have. They enable you to sign encrypted transactions and validate and use the cryptocurrencies sent to you.

What is the difference between a wallet address and the seed phrase?

The seed phrase is a set of 12 or 24 words and is used as a backup option to restore the wallet in case of loss or damage. A wallet address, on the other hand, is an address used to send and receive cryptocurrencies. Moreover, unlike the private seed phrase, the wallet address is public.

Can a wallet address be used more than once?

In general, wallet addresses can be used more than once. However, it's recommended not to reuse the wallet address after a transaction for security reasons.

How many wallet addresses can you have?

There's no limit to the number of wallet addresses. Just as a person can own multiple wallets, they can also have either several wallets or one wallet with multiple wallet addresses that can be used for different purposes. To protect privacy and enhance security, using multiple wallet addresses is even recommended.

How do you check the balance of a wallet address?

To view the balance of a wallet address, you need a blockchain explorer, where you enter the relevant wallet address. You'll then see not only the current balance but also the transaction history. Depending on the cryptocurrency or type of token or coin, there are different blockchain explorers.

Further topics related to cryptocurrency

Want to expand your knowledge about cryptocurrencies and wallets? In the Bitpanda Academy you'll find numerous articles to help you better understand the technical basics, use cases and security aspects. Discover more topics now related to Ethereum, blockchain and the safe handling of digital assets.

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