# Receive bitcoin

# Bitcoin public keys and addresses

The Bitcoin protocol utilizes public key cryptography to defend and verify the property rights of the individuals holding and transacting bitcoin. A private key is a large random number that should be kept secret. With the elliptic curve digital signature algorithm, based on the private key you can calculate a public key. If someone has only the public key, it is computationally infeasible [pretty much impossible] to calculate the private key. Whoever knows the private key can calculate a cryptography signature over a message, which proves that the private key was known by the signer, without actually revealing the secret.

For data size efficiency, in Bitcoin the public key is hashed and encoded into a bech32 address. This address commits to the public key, which commits to the private key. In a Bitcoin transaction, the output creates a new unspent transaction output which is "locked up" by an address. The input of the transaction spends a UTXO by providing a valid signature of the public key that the address committed to.

TIP

Wasabi Wallet does not "store your money", rather it stores your public keys and the encrypted secret that requires a password to decrypt the private keys, it creates addresses for receiving bitcoin, and it signs transactions that spend your bitcoin.

# The problem with address reuse

Whenever you use the same address to lock up different UTXOs, then all these coins can be spent by anyone who knows the private key. This makes it obvious for anyone that this one entity [you] owns all these coins, which is very bad for privacy. The first rule of Bitcoin privacy is never reuse addresses!

TIP

This is why Wasabi removes the address from the Receive tab as soon as it has received a coin.

# The importance of labeling

Satoshis are the base unit currency of the Bitcoin network and are truly fungible, meaning that any 100 000 000 satoshis are always equal to 1 bitcoin. Just like with gold atoms, it doesn't matter which specific gold atoms you have, as long as it's gold, it's gold. However, an unspent transaction output, a bitcoin, is a chunk of money and is not fungible, because it has a different amount of satoshis in it, a different public key locking it up, a unique transaction history, and a unique index number. This is just like a gold coin, with a unique amount of gold atoms, and either a pretty mintage, or an old chipped broken coin. Because UTXOs are not fungible, it is very important to know exactly which coin is which, and that is done by carefully labeling.

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In Wasabi it is mandatory to give every address a label of which entities know about this address, so that later you know where you got the coin from and you know how to spend it.

# Generating addresses step-by-step

  1. Start Wasabi and open the wallet that you want to receive coins into.
  2. Go to the Receive tab.
  3. Specify a label of the entities who know about this address.
  4. Click on Generate Address.
  5. Optionally change the label in the right click menu if new entities learn about the address.