How do Bitcoin wallets generate addresses?
Bitcoin wallets generate addresses through a series of cryptographic processes based on public-key cryptography. Here’s how it works:
1. Key Generation
When a user creates a Bitcoin wallet, the first step is generating a pair of keys: a private key and a public key. The private key is a randomly generated 256-bit number, which must remain secret, while the public key is derived from the private key using the Elliptic Curve Digital Signature Algorithm (ECDSA).
2. Address Creation
Once the public key is generated, it undergoes several steps to create a Bitcoin address:
- Hashing: The public key is hashed using SHA-256, producing a 256-bit hash. This is then hashed again using RIPEMD-160, yielding a 160-bit hash known as the public key hash.
- Versioning: A version byte is added to the beginning of the public key hash. For standard Bitcoin addresses (P2PKH), this byte is '0x00'.
- Checksum: The address is further hashed using SHA-256 twice, and the first 4 bytes of this hash serve as a checksum to ensure accuracy.
- Encoding: Finally, the versioned public key hash along with the checksum is encoded in Base58Check format, resulting in a user-friendly Bitcoin address.
3. Address Types
Different types of addresses can be generated, including legacy addresses (starting with '1'), Pay-to-Script-Hash (P2SH) addresses (starting with '3'), and Segregated Witness (Bech32) addresses (starting with 'bc1'). Each type has distinct features and use cases.
In summary, Bitcoin wallet addresses are generated through cryptographic hashing and encoding processes, ensuring security and uniqueness for each address.