Similar to the way e-mail addresses work, a bitcoin address can be used to both send and receive data — or in this case, bitcoins. That said, there is one major distinction to be made between bitcoin addresses and e-mail addresses. People can have multiple bitcoin addresses they can use to send and receive transactions.
In fact, it is advisable to use a brand new bitcoin address for every transaction, which may or may not be manageable for individual users depending on how many transactions they intend to process on a daily basis. Contrary to popular belief, the generation of a new bitcoin address does not require an active Internet connection.
A bitcoin address is an identifier representing a possible destination — or origin — for a bitcoin transaction. Every bitcoin address is between 26 and 35 alphanumeric characters in length and can start with a 1 or a 3. Creating new or additional bitcoin addresses can be done free of charge through the installed bitcoin software, or you can obtain a bitcoin wallet address from an exchange or online wallet provider.
One important aspect of a bitcoin address to keep in mind is that every address is case sensitive and exact. A bitcoin address like the following has both uppercase and lowercase letters in its string of characters:
Changing an uppercase letter to a lowercase letter or vice versa would result in an invalid recipient address, and the funds would not be transferred.
There is always an off chance of an invalid address being accepted as a recipient, but that only occurs once every 4.29 billion transactions.
Use a different bitcoin address for every transaction. Keep in mind that there is — technically — nothing wrong with using the same address over and over again, but using a new address for every transaction creates an additional layer of privacy protection.
Every bitcoin address is a specific invoice for a payment. Once a payment has been received to your bitcoin address, there is no reason for the sender to retain that data. However, in the event of a wallet address being lost or compromised, any future payments to this same address would be sent to a “black hole,” and be forever lost to the original address owner. This is the main reason why it is advised to use a brand new bitcoin address for every transaction — in order to avoid potential loss.