How a wallet address works
A wallet derives the address from a public key, by hashing the key and encoding the result in the network's own format. Formats differ:
- Ethereum: 42 characters, 0x followed by 40 hexadecimal characters
- Tron: 34 characters starting with T, in the usual Base58Check form
- Bitcoin: several formats, by address type
What an address can belong to
An address can belong to a single key, to a multisig arrangement or to a smart contract. Addresses are pseudonymous, not anonymous: no name is attached, and the full history of each one is public.
The EU's Transfer of Funds Regulation uses the term distributed ledger address: an alphanumeric code that identifies an address on a network using distributed ledger technology or similar technology, where crypto-assets can be sent or received.
How platforms use wallet addresses
An exchange or a checkout gives each customer, or each payment, a deposit address of its own and credits whatever arrives there. Some networks use a shared address plus a memo or tag, and a deposit without the tag has to be traced by hand.
For withdrawals, the platform validates the format, screens the address against sanctions and risk data, and may hold new addresses for a period or require an allow-list.
Wallet address, public key or wallet?
- Public key
- The key the address is derived from. Signatures are checked against it.
- Wallet
- The software or device that holds the keys. One wallet usually controls many addresses.
- IBAN
- Identifies an account at a bank that knows its holder. An address carries no name, and a confirmed transfer to it cannot be recalled.
Where a wallet address shows up in a platform
Modules that do the work
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- Ethereum.org, Ethereum accounts (developer documentation)
- TRON Developer Hub, Accounts
- Regulation (EU) 2023/1113, the Transfer of Funds Regulation, Article 3 (EUR-Lex)
General information, not legal advice: what applies to you depends on your services and your market.