Base58Check Encoding (Legacy Addresses)

While nodes process the 20-byte hash directly, humans need a more readable format. Bitcoin uses Base58Check to create the iconic legacy addresses that start with the number 1.

1. Why Base58?

Standard Base64 includes characters that look very similar, such as 0 (Zero) and O (Capital O), or I (Capital I) and l (Lowercase L).

• Base58 removes these ambiguous characters to prevent transcription errors.

• It also removes + and / so that addresses can be double-clicked and copied easily.

2. The Encoding Process

To turn a 20-byte Public Key Hash into an address, Bitcoin software follows these steps:

1. Add Version Byte: Prepend 0x00 (Mainnet) to the hash.

2. Double Hash: Calculate the SHA256(SHA256(Result)).

3. Checksum: Take the first 4 bytes of that hash.

4. Append Checksum: Add those 4 bytes to the end of the versioned hash.

5. Base58 Encode: Convert the final 25-byte string into the Base58 alphabet.

3. Error Detection

Because of the 4-byte checksum, if you mistype a single character in a legacy address, your wallet will recognize that the checksum doesn't match and will refuse to send the payment. This prevents coins from being sent into a "black hole" due to a typo.

4. Identifying P2PKH Addresses

• Prefix: Because the version byte is 0x00, the Base58 encoding almost always results in a string starting with 1.

• Length: Usually 34 characters (can vary between 26 and 35).

Address Type	Version Byte	Starting Character	Encoding
Mainnet P2PKH	0x00	1	Base58Check
Testnet P2PKH	0x6f	m or n	Base58Check
Mainnet P2SH	0x05	3	Base58Check

In the final section, we will build a Python P2PKH Auditor.