How bitcoin addresses are generated

Bitcoin Address Generation on Python

B itcoin is a digital currency created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous developer Satoshi Nakamoto. A bitcoin address is a unique identifier that serves as a virtual location where the cryptocurrency can be sent or hold. Transactions provide to transfer assets between Bitcoin wallets that keep private key and bitcoin addresses. The private key ensures that the transaction comes from the owner of the wallet. Generating bitcoin address as offline is possible. This code explains how you can generate a bitcoin address step by step. As you see at the figure below, there are some operations while bitcoin address is generated.

Let’s start to examine how can we generate bitcoin address;

• Step 1: Elliptic Curve Digital Signature Algorithm is used to generate Private Key because Public Key Cryptography provides bitcoin’s signature principle.

• Step 2: Due to Public Key Cryptography, we need Public Key that depends on a Private Key. So we generate it with the Elliptic Curve Digital Signature Algorithm too.

• Step 3: We apply SHA256 to ECDSA Public Key that is created in Step 2.

• Step 4: We apply RIDEMP160 to value that is created in Step 3 and get value as 20 bytes.

• Step 5: We prepend 00 as Network Byte to value that is created in Step 4.

• Step 6: We apply double SHA256 to the value that is created in Step 5 to Checksum.

• Step 7: We get 4 bytes of value that is created in Step 6 as Checksum.

• Step 8: We append Checksum value that is created in Step 7 to value that is created at Step #5.

• Step 9: We applied Base58 Encoding to value that is created in Step 8. After Base58 Encoding, we get the value that is Bitcoin Address. (In Python, b58encode result should decode to utf-8 for showing)

Finally, the result is comprised and the source code is available here;

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What is a Bitcoin address.

Ever wonder what all those letters and numbers really mean? This is an introduction to what a Bitcoin addresses are and how they work.

Here’s a random Bitcoin Address:

As you can see is a mix of numbers and letters beginning with the digit “1” (If you see a Bitcoin address not starting with “1” it may well be a new Bitcoin address generated with Segwit layer into mind — but that’s another blog post). This is the string which users send to each other in order to receive and send Bitcoin. A Bitcoin address can represent a person or something else, like a payment script (P2SH). The Bitcoin address can also be represented with a QR Code in order to make it easier to users to copy paste the value. If you’re wondering how this random string is generated keep reading!

First, we need to understand what the Public/Private Key Asymmetric Cryptographic method is and how it works.

Public key cryptography is a mathematical foundation for computer and information security. It’s a pair of keys, a private and a public one. The private key is picked randomly (more on this later) and the public key is derived from the private. In Bitcoin, the public key is used to receive funds and the private key is used to sign transactions.

How does this work for Bitcoin?

A Bitcoin user can send to another in a transaction an amount of Bitcoin and “sign” this transaction with their own private key and give his or her public key as well. Now this signature can be validated against the public key by anyone on the network (without revealing the private key) in order to check if the sender has the “right” to “spend” this amount of Bitcoin at that moment of time.

In summary, someone with the private key can sign a transaction uniquely and anyone with the public key can verify that the signature comes from someone that is the owner of the private key.

Note: for privacy and security reasons the signatures for a transaction are different each time but created from the same private key.

The relationship between the private and public key is based on a “one-way” mathematical function that is irreversible, which means that given an input you come up with an output and you cannot find the original input with the current output. Bitcoin uses the elliptic curves multiplication as the basis of its cryptography for generating secure public keys.

Once we have the public key, then we can generate the Bitcoin address by applying a one-way cryptographic Hash function to the public key.

It’s important to notice that there’s is no way of finding the private key with the public key nor the public key with the Bitcoin address.

Finding the Private Key

Private key in Bitcoin is just a number picked randomly between 1 and 2256, how the number is found in that range is up to the software developer. The only thing we have to take into account is that the source of randomness must have enough entropy to not be predictable or repeatable. It’s not recommended as developers to write their own random number generator nor use the programming language functions provided for this. Instead you can use a secure pseudorandom number generator that is cryptographically secure with a seed from a source of sufficient entropy.

Funny fact: If a Bitcoin address comes from a private key that can “only” be a number between 1 and 2^256 , would we run out of address one day? Well, first you have to get a picture of how big 2^256 is. It is immensely ridiculous, for comparison, it is approximately 10^ 77 in decimal and the visible universe is estimated to contain 10^ 80 particules, so it’s probably safe to say that we won’t run out of bitcoin addresses. Certain calculations say that there’s approximately 1 Public address available for every 64 atoms on this planet.

Elliptic Curve Multiplication and Public Key

The mathematics behind elliptic curve multiplication is outside of the scope of this article, so we’ll just assume that applying this “one way function” over the private key we get our public key.

In this link, you will find a Bitcoin address generator, this web page asks you to move the pointer around in order to generate sufficient randomness to pick the private key, and then generates the public key and the Bitcoin address.

From Public Key to Bitcoin Address

How do we get from the Public key to the Bitcoin Address? We get it by applying a “ one way hashing function” to the public key. Tired of hearing about “ hashing”? Get use to! Hashing function are used all over Bitcoin and blockchain technologies (Bitcoin addresses, script addresses, Proof of work mining, etc.). In Bitcoin, the two hashing functions used for generating the btc address are the “Secure Hash Algorithm” (SHA) and the RACE Integrity Primitives Evaluation Message Digest (RIPEMD), specifically SHA256 and RIPEMD160.

So first, we hash with SHA256 the public key, and then the result is hashed again with the RIPEMD160.

The result, is the Bitcoin address, but wait!

Because there’s one more step in the process! Ha! We need to encode the resulting string as “ Base58”. So what is “ Base58” you might be wondering. It is a text based binary-encoding format that was developed for bitcoin use specifically, and the main objective of it is make the Bitcoin address more “human-readable” by excluding some characters that might be confusing, like the 0 (number zero), O (capital o), l (lower l), I (capital i) and the symbols “+” and “/”.

An extra layer of security is placed on the resulting Base58 string in order to prevent typos or transcription errors. Base58Check is another encoding format that has a built-in error checking code. This code is just 4 bytes added to the end of the data. The main use case of the Base58Check is to prevent sending Bitcoin to an invalid addresses. The Bitcoin wallet when presented with the Base58Check string, it will calculate the checksum of the data and compare to the checksum included in the code. If they match, it’s a valid address, if don’t the address is not valid.

So guys, I hope that you learned something new about Bitcoin, if you have any question or suggestion just leave a comment, I’d be happy to answer.

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How To Get A Bitcoin Address & Why It Is Important

(Note: This article is for Bitcoin beginners.)

We all know how Bitcoin is taking over the world. But the funny part is people still fail to understand what it is and why it has become such a revolution.

Here are some of the facts we lined up – 9 Interesting Bitcoin Facts Every Bitcoin Owner Should Know – but there are more.

Bitcoin is a fully functional digital currency through which any amount of value can be transferred anytime anywhere in the world and there is nothing one can do to stop it.

Also, it a finite commodity to hold and as rare as explained by this tweet:

If you get 0.1 BTC no more than 2% of the world’s population can own more BTC than you. Once this dawns on enough people there will be a stampede to try to get even 0.1.

Despite this, many remain clueless about this revolutionary internet money and the first thing they ask is How do I get Bitcoin? Or How do I get a Bitcoin address?

Well, that’s what I am here to tell you and also to share some points so that you don’t get scammed.

How To Get A Bitcoin Address

A valid Bitcoin address is like a bank account number using which you store your bitcoins and check your balances.

For those who are seeing their Bitcoin addresses for the first time, I would say that it won’t look like traditional bank account number but instead, it looks like a long alphanumeric string starting usually with ‘1’ or ‘3”.

And for those who haven’t seen a Bitcoin address and think of it as an email address, you’re wrong!

Different Bitcoin addresses:

There are currently three address formats in use:

1. P2PKH which begins with the number 1, for e.g.: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.
2. P2SH type starting with the number 3, for e.g.: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.
3. Bech32 type starting with bc1, for e.g.: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq.

Now, that you have understood the types, format and what a BTC address looks like, it makes sense in talking about some of the reliable sources from where you can get your Bitcoin address if you haven’t already.

These sources are categorized based on device type & usage:

Mobile Bitcoin Wallets

Hardware devices that act like Bitcoin wallets also generate valid Bitcoin addresses. This is a physical device like a small USB and something you should use if you planning to hold Bitcoins for a longer period. This is also useful for those who wish to have a permanent Bitcoin wallet address.

Here are two most popular Bitcoin hardware wallets:

Watch this video tutorial to understand more about how to set-up your hardware wallet like Ledger Nano S to get your Bitcoin address.

For desktop lovers, there are desktop wallets that generate valid Bitcoin addresses. Some of these desktop wallets are:

Why Is Bitcoin Address Important?

A valid Bitcoin address is necessary because if you get this wrong, your bitcoins will be lost.

If you send bitcoins to an invalid address, the bitcoins will be lost in cyberspace or will remain with the sender.

Another way in which you can get scammed is when you are using a paper wallet-based Bitcoin address that you have received from someone. In this case, let’s assume the person who has given you this Bitcoin address is an attacker and he has already kept a copy of the private keys associated with that address.

And now you haven’t done a sweep of your paper wallet and are using the same address to receive your bitcoins. In this case, the attacker can take away all your coins once you have received coins on the address because he has a copy of the paper wallet private keys which are still valid because you haven’t swept.

Plus, if you are into the online business, it is good to be in tandem with the modern changing society which is internet driven and have the BTC addresses to receive payments.

Lastly, through a BTC address, you can actually make millions and billions of dollars with you across borders, something which was not possible before the invention of Bitcoin. You can sum up all your worth in bitcoins and get settled in another country altogether with the help of a Bitcoin address.

I’m sure you now know how you can get a Bitcoin address and why it is important to have one for yourself.

Now you tell us: Are you into Bitcoins yet, or are you still thinking? Do you have a Bitcoin address? Do share with us in the comment section below.

If you find this post useful, do share it with your friends on Facebook & Twitter!

Harsh Agrawal is the Crypto exchange and bots expert for CoinSutra. He founded CoinSutra in 2016, and one of the industry’s most regarded professional blogger in the fin-tech space.

An award-winning blogger with a track record of 10+ years. He has a background in both finance and technology and holds professional qualifications in Information technology.

An international speaker and author who loves blockchain and crypto world.

After discovering about decentralized finance and with his background of Information technology, he made his mission to help others learn and get started with it via CoinSutra.

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