Imagine sending someone (e.g. your friend Sarah) an email that reads ‘1 bitcoin’. You would:
- Log into your email account
- Enter Sarah’s email address
- Type ‘1 bitcoin’ into the body of the email
- Hit send
- Sarah would receive a message reading ‘1 bitcoin’
A bitcoin transfer works in a similar way, but instead of email accounts you and Sarah each have ‘wallets’. If you were sending 1 bitcoin to Sarah, she would receive 1 bitcoin in her wallet, rather than an email in her inbox.
From a user’s perspective, wallets function like email accounts, but they are much more secure. Each wallet has a public address used to send and receive bitcoin (like your email address), and a ‘private key’ used to access your funds (like your password).
A bitcoin wallet public address (also known as a ‘public key’ or ‘wallet address’) is comprised of a string of 26-35 letters and numbers, starting with numbers 1 or 3. Here’s an example of a bitcoin wallet address:
Users of the blockchain can transfer funds to your wallet by entering your public address, and if you transfer bitcoin to somewhere else it will be recorded on the blockchain as having been sent from your wallet address.
Private keys are comparable to your password. They are what enable you to access the bitcoin you have received, and send bitcoins to other wallets. But private keys are much, much more secure than email passwords. Private keys take the form of a 64 character long string of letters (A-F) and numbers (0-9). Here’s an example of one:
So, if you wanted to make a payment to Sarah, you would first need to have your wallet’s private key to gain access to your bitcoin wallet and the funds held within it. You can then choose to send funds from your wallet to Sarah’s through entering her wallet’s public address.
The transaction will then be publicly recorded on the blockchain as a transfer of one bitcoin from your wallet to Sarah’s.