In order to use the Bitcoin network, a wallet is needed. It can take the form of an application on a computer or phone, or that of a hardware wallet such as the Ledger Wallet Nano S. By the decentralized nature of the Bitcoin network, or most cryptocurrencies, the addresses that control the funds are not registered anywhere: you cannot register an address as your own property with any organization or bank.
So how do wallets determine if an address belongs to you?
They simply draw them at random. This means, of course, that two different Bitcoin wallets could theoretically generate the same address, and that the two owners could then spend the same funds. Shocking? Yes, but you will be told that such an event is unlikely to happen. Let’s examine together the probability for such an event to happen.
The total number of possible Bitcoin addresses is 2^160. By performing statistical calculations, it is possible to determine the probability that two wallets will randomly generate the same address. For mathematical details, please refer to this article.
We can therefore conclude the following: the probability of having a 99.9999% chance of having an address collision, ie. your wallet randomly generating the same address as another is one in 6.35.10^24. But such a large figure is relatively difficult to conceptualize.
What does it match to?
Let’s try to evaluate the size of such a figure through an analogy. Imagine that you have a computer capable of generating 400,000 Bitcoin addresses per second, which already requires significant computing power.
Start the computer, and go for a walk. For example, complete the Tour of France (6397 km), walking at a normal pace of 4 km/h. Once you have finished your walk, say hello to a random person, and start your walk again. Once you have said hello to 66 million inhabitants, and completed the Tour de France each time, visit one of the 36,000 French municipalities.
Now repeat your tours of France, your greetings to each inhabitant, and when you have finished visiting all of the French municipalities, you will probably have generated a Bitcoin address collision with your computer.
The computer in question would then need 10 million billion of hard drives to store such a large amount of data. Unfortunately, here is the bad news: there is no guarantee that the address on which you generated a collision contains bitcoins: at present, only 10 million addresses have been used on the network.
The probability of generating a collision on an address containing bitcoins is therefore much lower, and it is highly likely that the Earth would have disappeared well before you finish your tours of France.
Conclusion: Don’t worry
All this is simply to say that one should not worry about the possibility that an address collision is generated by two different wallets. The creator of the Bitcoin network has devised a particularly well-adapted system, which, through decentralization, ensures that everyone has the opportunity to use the network without having to register the addresses of their wallets with anyone, and this without fear that two people will ever use the same address.
FAQs
Many wallets and exchanges automatically generate a new address for every transaction, and most crypto wallets are actually able to manage hundreds of Bitcoin addresses simultaneously. Any previously used addresses remain permanently connected to your wallet and can still be used to send or receive funds.
What happens if you send Bitcoin to an old Bitcoin address? ›
If you send bitcoins to an invalid address on the blockchain, the bitcoins will typically be lost and irretrievable. This is because Bitcoin transactions are irreversible by design. When you send bitcoins, you create a transaction that includes the recipient's address as the destination.
Can the same Bitcoin address be generated twice? ›
No, two people cannot have the same Bitcoin wallet address because each Bitcoin wallet address is unique and is generated using a one-way hash of the wallet's public key. The private key is used to sign transactions and prove ownership of the funds associated with the wallet address.
Can I use my old Bitcoin wallet address? ›
Yes. Funds sent to old addresses will still belong in your BitPay wallet balance. Although not recommended, you can reuse old addresses to manage funds in your BitPay wallet.
Can you reuse the same Bitcoin address? ›
Ideally, every bitcoin address is only used once. Reusing addresses can have negative implications such as diminished privacy and diminished security. The most private and secure way to use bitcoin is to use a brand-new address for every transaction.
What happens if you send Bitcoin to same address twice? ›
No, a Bitcoin address does not change every time you send bitcoins from that address. A Bitcoin address is a unique identifier that is generated by a user's wallet software and it is used to receive bitcoins. You can continue to use the same Bitcoin address to receive bitcoins multiple times.
Can you use someone else's Bitcoin address? ›
A public key can be compared to your email address. Anyone can send emails to it, but only the owner of the email address can read them. With a cryptocurrency address, this is no different since others can use this address to send crypto, and the owner of the address is the only one who can use the digital asset.
Do I need a new Bitcoin address for every transaction? ›
It is recommended to use a fresh address for every transaction, as this benefits user privacy. As well as protecting your privacy, using a fresh address greatly reduces the risk of losing incoming funds or sending them to the wrong address.
How many times can a Bitcoin address be used? ›
Only using Bitcoin addresses one time is best practice. By using addresses more than once, users give up information that can result in negative outcomes. Only using Bitcoin addresses one time is best practice.
Does Bitcoin address change after every transaction? ›
Your address for Bitcoin and Bitcoin-based crypto assets changes every time you receive a transaction. For other crypto assets (Ethereum, XRP, Stellar, etc.) the address stays the same. Bitcoin transactions are public information.
The key to solving crypto crimes is tracking the address to the wallet then the wallet to the user. If police find the user, they can find the cash. Unfortunately, it is not that easy to find the user. First, the police will have to track the cryptocurrency address to a wallet.
Can a Bitcoin wallet address be traced to the owner? ›
Bitcoin, contrary to popular belief, is traceable. While your identity is not directly linked to your Bitcoin address, all transactions are public and recorded on the blockchain. So, while your name is not attached to your address, your address is attached to your transaction history.
How long does Bitcoin wallet address last? ›
Wallet addresses do not expire, but some providers generate multiple addresses for the same wallet. This means that even if the address has changed, you should still be able to see the funds in your wallet.
What happens if you send BTC to a non existing address? ›
If the address is not valid by the bitcoin rules, it will never get sent. Any wallet will refuse sending it. Even if you manually construct such a transaction any node receiving it will drop it and blacklist you for sending it. If the address is valid (an existing one or a new one) the transaction will pass.
Does my BTC address change every deposit if I deposit to an old address do I still get coins? ›
Some Bitcoin wallets have the function that they give you a new address for every transaction. This is done for privacy reasons. If a wallet does this it will still hold all the funds in the same wallet meaning you still have access to it even though your address changes every time.
What happens if you send Bitcoin to a nonexistent address? ›
If you sent the BTC to a valid but unowned address, the BTC would go there and be lost. They are lost because the chance of generating the corresponding private key by chance is 1/10^77, which in the entire lifespan of the universe, will basically never occur.
Can I reverse a Bitcoin transaction? ›
Cryptocurrency transactions on the Bitcoin and Ethereum networks are, by design, irreversible. This means you cannot reverse or cancel a completed transaction for any reason.
