Bitcoin Addresses: The Complete Guide

Introduction

In our previous discussion, we explored the fundamentals of transactions in blockchain systems. Now, we'll dive into Bitcoin addresses—the human-readable identifiers that replace arbitrary strings to designate ownership of transaction outputs.

Code Implementation Note: Significant changes have been made to the codebase. Refer to the GitHub comparison for full details.

Understanding Bitcoin Addresses

A Bitcoin address like 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa (the first-ever Bitcoin address, allegedly owned by Satoshi Nakamoto) serves as a public identifier for receiving funds. Crucially:

• Addresses are derived from public keys through cryptographic hashing.
• They contain no personal data, adhering to Bitcoin's privacy principles.

Public-Key Cryptography Essentials

Bitcoin uses ECDSA (Elliptic Curve Digital Signature Algorithm) with key pairs:

• Private Key: A secret number proving ownership (e.g., randomly generated 256-bit integer).
• Public Key: Derived from the private key using elliptic curve multiplication.

// Key pair generation in Go
privateKey, err := ecdsa.GenerateKey(elliptic.P256(), rand.Reader)
publicKey := append(privateKey.PublicKey.X.Bytes(), privateKey.PublicKey.Y.Bytes()...)

Digital Signatures

Signatures verify:

1. Data Integrity: No tampering during transmission.
2. Authenticity: Confirmed sender identity.
3. Non-Repudiation: Sender cannot deny the transaction.

Signing workflow:

1. Hash the transaction data.
2. Sign the hash with the private key.
3. Attach signature to the transaction input.

Technical Implementation

Address Generation Steps

1. Double Hashing: Apply RIPEMD160(SHA256(PublicKey)) to the public key.
2. Version Prefix: Add network version byte (e.g., 0x00 for mainnet).
3. Checksum: Compute SHA256(SHA256(version + hash)) and take the first 4 bytes.
4. Base58 Encoding: Convert the final payload to human-readable Base58.

func (w Wallet) GetAddress() []byte {
    pubKeyHash := HashPubKey(w.PublicKey)
    versionedPayload := append([]byte{version}, pubKeyHash...)
    checksum := checksum(versionedPayload)
    fullPayload := append(versionedPayload, checksum...)
    return Base58Encode(fullPayload)
}

Transaction Signing & Verification

• Signing: Requires private key and referenced outputs.
• Verification: Checks against the public key and signature.

func (tx *Transaction) Sign(privKey ecdsa.PrivateKey, prevTXs map[string]Transaction) {
    txCopy := tx.TrimmedCopy()
    for i, vin := range txCopy.Vin {
        prevTx := prevTXs[hex.EncodeToString(vin.Txid)]
        txCopy.Vin[i].PubKey = prevTx.Vout[vin.Vout].PubKeyHash
        txCopy.ID = txCopy.Hash()
        r, s, _ := ecdsa.Sign(rand.Reader, &privKey, txCopy.ID)
        tx.Vin[i].Signature = append(r.Bytes(), s.Bytes()...)
    }
}

Practical Usage

Creating Wallets and Transactions

1. Generate a wallet:

   $ blockchain_go createwallet
   Your new address: 1AmVdDvvQ977oVCpUqz7zAPUEiXKrX5avR

2. Create a blockchain:

   $ blockchain_go createblockchain -address 1AmVdDvvQ977oVCpUqz7zAPUEiXKrX5avR

3. Send funds:

   $ blockchain_go send -from 1AmVdDvvQ977oVCpUqz7zAPUEiXKrX5avR -to 1NE86r4Esjf53EL7fR86CsfTZpNN42Sfab -amount 6

👉 Explore more about secure transactions

FAQ Section

Q1: Why can't I reuse Bitcoin addresses?
A1: While technically possible, reusing addresses compromises privacy by allowing others to link all transactions to the same owner.

Q2: How secure is ECDSA?
A2: ECDSA provides robust security due to the mathematical complexity of reversing elliptic curve operations, making private key forgery computationally infeasible.

Q3: What happens if I lose my private key?
A3: Lost private keys result in permanent loss of access to associated Bitcoin funds—no recovery mechanism exists.

Q4: Why does Base58 exclude certain characters?
A4: Base58 omits visually ambiguous characters (0/O/I/l) to prevent errors in manual entry.

Q5: How are transactions validated before mining?
A5: Nodes verify signatures against public keys and ensure inputs reference unspent outputs.

👉 Learn advanced wallet security practices

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