#addressing systems

Introduction

Distinguishing participants in the Bitcoin environment is a simple task. It is solved with the help of unique addresses. Each address is received from a public key owned by a participant. This public key might be well known to the community after being used but it gives no chance to connect it to the owner since no personal data is given by default.

All projects that were introduced after Bitcoin can be divided into several groups according to the identification approach. The first group includes solutions that use approximately the same key handling processes. Here it means that a particular hashing method or a number of bits used as an address are irrelevant. The main idea is kept unchanged.

The second group includes projects that are improving privacy, data protection or any other core features. This means that one or several core components were substituted and the whole system was strengthened. On the contrary, the third group includes projects that rejected some core concepts of the basic blockchain proposal as they were described in the Bitcoin whitepaper.

The last group unites special projects that can’t be compared with the original proposal whatsoever. All these groups have outstanding representatives. Let’s examine them briefly.

Similar addressing methods

Bitcoin-like. Many cryptocurrencies were based on the Bitcoin basic proposal. Some of them get abandoned over time. Others become as popular as Bitcoin. For example,  Litecoin, Bitcoin Cash, Bitcoin SV, Bitcoin Gold, etc.

Ethereum. This is another famous crypto project that uses addresses unrelated to users' personal data. Inspired by the Bitcoin proposal, Ethereum developers improved many components. However, some of them were totally changed and others were slightly modified. The addressing system belongs to the second group. Ethereum uses a different hashing method called Keccak. Another difference is that an Ethereum address consists of 20 bytes (the first 12 bytes are dropped from the hash result of 32 bytes). In Bitcoin, the same range was reached by using RIPEMD-160 hashing function which gives 20 bytes by default. These characteristics hold true for Ethereum forks, like Ethereum Classic.

Ripple. In the Ripple network, each participant has his or her own address based on a public key presented in the Base58 format. A user can also start his or her own validation server which is similar to a mining node.

Improvement group

Monero. This project proposes more security than the standard Bitcoin approach. According to the official explanation, a generated public key can be used just once. In combination with ring signatures, this approach allows hiding a real user from being detected.  

Z-cash. In this project, a special technique called zk-SNARK is used. This technique implies that two types of addresses are used by participants. One of them is transparent, just like in Bitcoin or similar projects. Another address type remains shielded. It is hidden from all participants except the interacting pair. It is stated to be “built on strong science”.

Simplified group

In this group, there are many projects that agreed to work without privacy and anonymity. This could be caused by NYC and AML requirements, governmental legislation, or internal rules of a company. There are a lot of examples, so let's mention only a few projects:

NEO. Several standards united under the X.509 digital identity are used here. They use keys along with user identification data;

Corda. The project authors propose a partial identity disclosure. All participants use X.509 but only those who want to disclose themselves can be seen on the network.

Alternative group

This group includes projects that might be similar to others yet have differences in their addressing schemes:

EOS proposes a unique multi-user control along with accounts. Each participant has his or her own private key, but each account can be controlled by a combination of several keys.

IOTA. As a worldwide project uniting intellectual things, IOTA differs a lot from other proposals. In the addressing area, the difference is that all addresses are one-time applicable. Instead of them, accounts are used many times.

Afterword

There are obviously much more projects worth to be explained and examined. However, their addressing systems are either similar to those illustrated above or are subject to minor changes. Moreover, their differences may be too complicated to explain within the given article format. We will return to some of them in our further researches.

Also for reading:

https://blockspoint.com/articles/technologies/bitcoin-addressing