Blockchain is one of the buzzwords in recent times. The blockchain is also a concept that poses a huge revolution not only in most countries’ economies but in all kinds of areas. Understanding what that chain of blocks is, is not that difficult, and since this concept is being used more and more, we wanted to do a kind of quick introductory course to the blockchain, to explain what it is, what blockchain addresses are, how it works and other information you need to know about blockchain.
For example, let’s say John wants to send Luis $1,000. The normal thing is to go through a bank. The bank acts as an intermediary for this and many other transactions, effectively centralizing the movement of capital from one place to another.
John would ask his bank to withdraw 1,000 dollars from his account and transfer them to Luis’s account: in just a few hours (depending on the bank, of course) that bank will have recorded the transaction in his account, subtracting 1,000 dollars in his account and communicating to the other bank that he must add 1,000 dollars to Luis’s account.
Someone in Luis’s bank (at this point, we already know that this someone is a computer program) will note that in Luis’s account there are 1,000 dollars more from John’s bank account.
This management has not required a transfer of bills from one side to another, but there have simply been one or two banks that have been in charge of making the money go from one to another with a simple change in the balances of their accounts.
All great and fantastic, except for one problem: That neither John nor Luis have any control over the process, of which only those banks have all the information. They both depend on those banks and their way of doing things to complete that transaction. They are subject to its conditions (and its commissions, of course).
This is where the blockchain comes in, which basically eliminates intermediaries, decentralizing all management. The control of the process belongs to the users, not the banks – we continue talking about money, but the example can be extrapolated to other types of transaction – and it is they who basically become part of a huge bank with thousands, millions of nodes, each of which becomes a participant and manager of the bank’s account books.
What is Blockchain?
Well, a gigantic account book in which the records (the blocks) are linked and encrypted to protect the security and privacy of the transactions. It is, in other words, a distributed and secure database (thanks to encryption) that can be applied to all kinds of transactions that do not necessarily have to be cheap.
This chain of blocks has an important requirement: there must be several users (nodes) who are in charge of verifying these transactions to validate them and that thus the block corresponding to that transaction (in each block there are a large number of transactions that, yes, is variable) is recorded in that gigantic ledger.
To make this happen, users need a blockchain address that serves as the traditional bank account, just like your normal bank account number is so imported exactly the same way your blockchain addresses are.
( Also Read: The Definitive Guide On Blockchain )
What Is a Blockchain Address?
Initially, when bitcoin became a thing it was made possible to send payments via an IP address like this 220.127.116.11, this was specially put in place for convenience so that users won’t have to struggle with various addresses and public keys.
Though convenient, this method is not so secured as it could be penetrated with a man-in-the-middle-attacks and it got discontinued, a new approach was utilized which has proven to be more secured over the years.
Just like your normal bank IBAN or SWIFT address a placeholder was made for easy transactions which makes it possible to send and receive blockchain transactions without fear. Mind you, the format at which the address is doesn’t really matter but to serve the purpose for which it was meant for which is to send payments and receive.
The blockchain address serves as a secure identifier that is already in existence before users registers for a wallet, this is because blockchain is a mathematical operation (problem-solving).
The History of Blockchain Address Generation (The Public Key)
When the use of IP addresses was discontinued in Bitcoin a new and unique standard format of address was brought up.
The format is known as P2PKH address which is 34 signs starting with a 1, all alphanumeric. You must be wondering what the term P2PKH means, this simply means “Pay to Public Key Hash.” For those who don’t play with codes you tend to find it difficult to understand this, it is a hashed public key you pay to, we will shed more light on this as you read further.
Whichever wallet software you make use of can easily create a “Pay to Public Key Hash (P2pKH)” address, it is just a combination of alphabets and numbers, your newly created wallet gets entropy which is then used to generate a cryptographic algorithm called ECDSA private key.
This is an asymmetric signature algorithm used to send a signed message for individuals showing that you and only you own the address with a signature validation on it, just like you affixing your signature on a mail or letter.
Once the private key has been created with the help of entropy then the public key will be associated with the wallet usually being done by randomly selecting some coordinates and doing some mathematical calculations which can be done via a computer system and servers.
Leaving aside the details on how they are created what matters most to users is that they should be able to make a secured transaction with the help of this technology i.e., sending of money, receiving of funds, and also for payment.
Normally the public key is always around 65 characters which makes it difficult to use as one can easily make a typographical error and type in a wrong number or alphabet which could lead to the loss of funds but thank goodness for the developers of bitcoin who made a simple address and less lengthy address form the public key so you do not need to know what you don’t feel like knowing, what matters most is your simple wallet address.
Creating a Bitcoin Blockchain Address
There is an algorithm put in place to handle the creation of your wallet address, for better understanding, this is what actually happens: The software hashes your individual public key with SHA 256 and the result with RIPEMD-160 with an addition of 00 at the start of the RIPEMD-160 and that is why we have a 1 starting the P2PKH followed by a four checksum-bytes ending it.
The result gets hashed twice with SHA-256 of which your wallet will now convert to a simple base58 string which provides you a short address that you can easily note down or just use a copy function to get.
Once you paste or type your address in your bitcoin wallet the system tried to verify if the address is correct checking the prefix and also the checksum, once it sees that it doesn’t match then the transaction automatically gets rejected. With this in place, you are saved from sending a transaction to a wrong address all because of a typographical error made when attempting the transaction.
In bitcoin, a more advanced address is used called the P2SH address meaning “Pay to Script Hash”. With this, you do not pay to a hash of a public key but instead, you pay to a script hash so to get a transaction signed you do not need to give a signature but a script.
With this, we have a more flexible verification method that serves the same purpose.
Format of Addresses in other Crypto coins
Just like bitcoin other coins like the Altcoins and so on also have a similar form of address but there are some differences, the likes of Dash, Dogecoin and Litecoin make use of the same cryptographic procedures which generates the previously mentioned hashes i.e., the ECDSA, SHA 256 and RIPEMD 160.
For bitcoin we have it starting with a “1”, Altcoins (Litecoin, Dodge, Dash) with an “L”, “D” and “X” respectively.
For Ethereum the address is quite different from that of bitcoin, this made most people a bit confused about the form of address when Ethereum became known, Ethereum has a hexadecimal string that starts with an “0x” E.g. – “0x0eb0747ec608925489ee5f9f735c734a2c0 f1381”.
Ethereum addresses usually start using a private key with an ECDSA for generating a 64-byte public key which makes it technically look like that of bitcoin.
One other thing you need to know about Ethereum is that it has no checksum, unlike other cryptocurrencies. Ethereum can use any hexadecimal 40-character string to create its address and this is the main reason why Ethereum developers usually advise users not to type in their address, instead you use the copy function in your wallet.
Now the developers have a format named the “ICAP” which now uses the base 58 characters and starts with an E. Example:” E7338YZN0F2WZO073KGTWW0R8PX5ZPPZS”
With STEEM your username is always your wallet address, it is a cryptocurrency based on the Bit Shares concept and has been on for some years now with good performance.
You must have heard about the social media called Steemit, if you haven’t it is a social media platform that has a coin integration which most of its users use to earn for publishing content.
After publishing your content, you earn the STEEM coin through upvotes, it also has delegates who can influence your growth and earnings, each delegate has a hierarchy level that determines the amount of the coin you will get.
Steemit also utilizes three different tokens, the STEEM, STEEM power, and STEEM Dollar, never forget that your STEEM address is your username.
We hope you have a clearer insight on what Blockchain Address is and we have cut across the most popular cryptocurrencies for you to understand it more. Make use of the comment section to air your opinion.