File:Bitcoin explained in 3 minutes. It allows people to send or receive money across the internet, even to someone they don’t know or don’t trust. Money can be exchanged without being linked to a real identity. A Bitcoin address, or simply address, is an microcoin bitcoin of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment.
Addresses can be generated at no cost by any user of Bitcoin. For example, using Bitcoin Core, one can click “New Address” and be assigned an address. It is also possible to get a Bitcoin address using an account at an exchange or online wallet service. One of the differences between using bitcoin and using regular money online is that bitcoin can be used without having to link any sort of real-world identity to it.
Unless someone chooses to link their name to a bitcoin address, it is hard to tell who owns the address. Each address has two important pieces of cryptographic information, or keys: a public one and a private one. Because of this, it is very important that this private key is kept secret. To send bitcoins from an address, you prove to the network that you own the private key that corresponds to the address, without revealing the private key. This is done with a branch of mathematics known as public key cryptography. A public key is what determines the ownership of bitcoins, and is very similar to an ID number. If someone wanted to send you bitcoins, all you would need to do is supply them your bitcoin address, which is a version of your public key that is easier to read and type.
For example, if Bob has 1 bitcoin at the bitcoin address “ABC123,” and Alice has no bitcoins at the bitcoin address “DEF456,” Bob can send 0. As soon as the transaction is processed, Alice and Bob both have 0. Anyone using the system can see how much money “ABC123” has and how much money “DEF456” has, but they cannot tell anything about who owns the address. In the example above, “ABC123” and “DEF456” are the bitcoin addresses of Bob and Alice.
But Bob and Alice each have a second key which only they individually know. This is the private key, and it is the “other half” of a Bitcoin address. The private key is never shared, and allows the owner of the bitcoins to control them. However, if the private key is not kept secret, then anyone who sees it can also control and take the bitcoins there. This happened on live TV when Bloomberg’s Matt Miller accidentally showed a private key to viewers. The money was taken immediately. Sites or users using the Bitcoin system are required to use a global database called the blockchain.