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How to Identify Bitcoin Addresses

How to Identify Bitcoin Addresses

Balogun Malik

Balogun Malik

Introduction

Bitcoin, the revolutionary digital currency, is based on a decentralized network protected by blockchain technology. One of the most important components of this ecosystem is the Bitcoin address, which is a cryptographic identifier used to send and receive Bitcoin. In this article, we will look at the intricacies of Bitcoin addresses, how they are created, and the various types available.

Anatomy of a Bitcoin Address

A Bitcoin address is a 26-35 character alphanumeric string used as a destination for Bitcoin transactions. Simply put, a Bitcoin address is used to receive Bitcoin. There are a few things to know when talking about Bitcoin addresses. They are listed as follows:

  1. Public Key and Private Key

  2. Hash Functions

  3. Base58 Encoding

Public Key and Private Key

A Bitcoin address consists of two cryptographic keys: public and private keys. The public key can be made public, i.e., given to someone, and is derived from the private key, which is kept secret. A private key holds all the unspent transactions (the wallet balance). When combined with cryptographic algorithms, the private key can sign transactions and prove the bitcoins' ownership. Bitcoin public key and private key are generated using an elliptic curve digital algorithm (ECDSA). Read more here

Hash Functions

Due to privacy and security concerns, Bitcoin addresses are not generated directly from public keys. Instead, they are created using a series of hash functions. The most commonly used hashing algorithm is SHA-256 (Secure Hash Algorithm 256-bit).

Base58 Encoding

To make Bitcoin addresses more ergonomic, they are Base58 encoded, which excludes characters that are easily confused with one another (0, O, I, l). This produces a more readable representation of the address. Below is an example of the Base58 alphabets:

123456789ABCDEFGHJKLMNPQRSTUVWXYZabcdefghijkmnopqrstuvwxyz.

Type of Bitcoin Addresses

Bitcoin addresses vary in their formats, each designed for different reasons and use cases.

  1. Pay-to-Public-Key-Hash(P2PKH)

    Also known as a legacy address, this is the most common Bitcoin address; it starts with "1".

  2. Pay-to-Script-Hash(P2SH)

    P2SH addresses start with "3." They are more complex than legacy addresses because they enable complex scripts such as multi-signature transactions.

  3. Pay-to-Witness-Public-Key-Hash

    P2WPKH is known as a segregated witness (segwit). SegWit addresses begin with 'bc1', and are part of a protocol upgrade intended to improve the efficiency of bitcoin transactions. They separate the witness data from the transaction data, thereby reducing transaction sizes.

  4. Pay-to-Taproot

    P2TR is the most recent Bitcoin address; it starts with "bc1p". This address combines privacy with efficiency.

Coding a Bitcoin Address Checker

Now that we can identify some of the popular Bitcoin addresses, let us build a simple Bitcoin address checker.

I assume you have Rust installed on your machine. If not, visit here to install and set up Rust on your computer.

Follow the below steps to clone and run the code.

Open your device terminal and copy and paste the below command.

git clone https://github.com/BalogunMalikO/Bitcoin_address_checker

After that, change to that directory using the command below.

cd Bitcoin_address_checker

and open the directory; if you are using VScode, type this command.

code .

The above code will open the source code in your VScode. Open the terminal in your code editor and type

cargo run

The above command will install the dependency in the cargo.toml and run the code simultaneously.

Enter any Bitcoin address to check what type it is.

Summary

In this article, we delved into what a Bitcoin address is, the anatomy of Bitcoin addresses, and various popular types of Bitcoin addresses, as well as building a Bitcoin address checker.

You can find the source code here on GitHub