Address Generation

2 min read

Pronunciation

[uh-dres jen-uh-rey-shuhn]

Analogy

Think of address generation as the process of creating a unique postal from your identity. Just as your personal information (analogous to your ) is used to establish your legal residence, which then gets formatted into a standardized mailing that others can use to send you items without knowing your personal details, your is used to derive a , which is then transformed into a standardized that others can use to send you without ever learning your .

Definition

The cryptographic process of creating addresses from underlying key material through a series of transformations. Address generation involves deriving public keys from private keys, then applying , encoding, and formatting operations to produce addresses that serve as destinations for transactions.

Key Points Intro

Address generation incorporates several cryptographic techniques to create secure, verifiable destinations.

Key Points

One-way transformation: Utilizes cryptographic functions that prevent reverse-engineering private keys from public addresses.

Blockchain-specific formatting: Applies network-specific rules for address structure, prefixes, and checksums.

Verification mechanisms: Incorporates error-detection features like checksums to prevent typos and transmission errors.

Identity abstraction: Creates pseudonymous addresses that don't directly reveal the underlying public or private keys.

Example

When David's needs a new receiving , it first derives the next in his 's receiving path (m/44'/0'/0'/0/5). From this , it computes the corresponding using multiplication. The then hashes this with followed by , adds a version byte prefix (0x00 for ), calculates a double-SHA-256 checksum, and encodes the result using Base58Check. The resulting (starting with "1") is displayed to David, who shares it with a friend to receive .

Technical Deep Dive

Address generation varies by but typically follows specific cryptographic steps. For P2PKH addresses: (1) start with a 256-bit ; (2) apply multiplication (secp256k1) to derive a 65-byte (33 bytes if compressed); (3) the with ; (4) the result with to get a 20-byte payload; (5) add version byte (0x00 for ); (6) calculate double-SHA-256 checksum (first 4 bytes) of the extended payload; (7) append checksum to extended payload; (8) encode with Base58Check. SegWit addresses follow different paths, with P2SH-wrapped SegWit using a script (version 0x05, addresses starting with "3") and native SegWit using Bech32 encoding (addresses starting with "bc1"). addresses derive from the of the , taking the last 20 bytes and formatting in hexadecimal with "0x" prefix. Other blockchains implement variations, including Bech32 with human-readable prefixes (like "cosmos1...") or Base58 with network identifiers (like "tz1...").

Security Warning

validation is crucial—sending to an incorrectly generated or typed can result in permanent loss. Always use the validation functions built into software, and verify the first and last several characters when copying addresses. Be aware that format upgrades (like SegWit) may create compatibility issues with older software or exchanges. When generating addresses programmatically, use well-audited libraries rather than implementing cryptographic functions yourself.

Caveat

While address generation is designed to be secure, implementation flaws can undermine this security. Some early wallets had weaknesses in random number generation that led to vulnerabilities. Additionally, formats evolve over time as blockchains implement new features, potentially creating fragmentation in compatibility across the ecosystem. Privacy considerations also apply, as reuse (using the same for multiple transactions) can compromise privacy by linking transactions together on the .

Related Terms

Public Key

Private Key

HD Wallet

Blockchain & Cryptocurrency Glossary

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