When opening a bank account, users are given an IBAN number used to receive and send funds. Similarly, when opening a cryptocurrency wallet, users are provided with a public address and a private key which are a string of random numbers. The public address could be compared to a bank account’s IBAN number, which gets shared with other people so that they can transfer funds to it. On the other hand, the private key is similar to your bank’s personal access information allowing full management of your funds. It is just as important that the private key is kept safe and isn’t shared with anyone else.
Originally, for every Bitcoin wallet transaction there were new private keys and public keys generated. This was a huge drawback, as users had to back up the new wallet information every time they received funds. However, as the community grew larger and blockchain technology developed further, a solid breakthrough emerged with BIP32 (Bitcoin Improvement Proposal), which marked the creation of the Hierarchical Deterministic Wallets (HD Wallet).
The HD Wallet has solved the technological drawback by generating a clear structure for the users’ wallets & addresses by automatically generating child private and public keys. At the core of the hierarchical structure lies the single master key (parent seed) from which all other keys are generated. This, in turn, solved the issue of users needing to constantly renew their wallets keys, as well as made it substantially easier to create and restore backups with the use if this single seed.
What is an xPUB?
From the master public key child key pairs can be generated, defined as xPUB (Extended Public Key). xPUB contains solely public information and doesn’t give access to the funds in your wallet. However it’s important to know that xPUB can be used to view (read-only) the child wallet’s addresses, transactions, and balances, which suggests that it’s highly risky to share the key with anyone.
What are yPUB and zPUB?
As blockchain technology developed further and SegWit adoption become more mainstream across the crypto community, the BIP49 standard was introduced, giving origin to the yPUB. In essence, a yPUB is an upgrade of the xPUB key following newer standards and requirements, such as an address type P2SH-P2WPKH. It’s important to note that yPUB is only applicable for backward-compatible SegWit Wallets.
The latest Public Extended Key upgrade is called zPUB. Just like its predecessor, zPUB follows BIP49 standard but has an address type P2WPKH, compatible for native SegWit wallets.
Sounds like a lot to take in? An easy way to differentiate between the three types of addresses is to look at how they start. xPUB addresses always begin with a “1″, yPUB addresses start with a “3”, and zPUB addresses begin with “bc1”.
The opinions presented in this article do not in any way constitute trading, investing or financial advice.
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