A bitcoin address is created by taking the corresponding public key of a private key and hashing it twice, first with the SHA-256 algorithm and then with RIPEMD-160. The resultant 160-bit hash is then prefixed with a version number and finally encoded with a Base58Check encoding scheme. The bitcoin addresses are 26-35 characters long and begin with digit 1 or 3.

A typical bitcoin address looks like a string shown here:

1ANAguGG8bikEv2fYsTBnRUmx7QUcK58wt  

This is also commonly encoded in a QR code for easy distribution. The QR code of the preceding bitcoin address is shown in the following screenshot:

Currently, there are two types of addresses, the commonly used P2PKH and another P2SH type, starting with number 1 and 3, respectively. In the early days, Bitcoin used direct Pay to Pubkey, which is now superseded by P2PKH. These types will be explained later in the chapter. However, direct Pay to Pubkey is still used in Bitcoin for coinbase addresses. Addresses should not be used more than once; otherwise, privacy and security issues can arise. Avoiding address reuse circumvents anonymity issues to an extent, Bitcoin has some other security issues as well, such as transaction malleability, Sybil attacks, race attacks and selfish mining which require different approaches to resolve.

Transaction malleability has been resolved with so-called Segregated Witness soft fork upgrade of the Bitcoin protocol. This concept will be explained later in the chapter.