Wallets vs. Wallet Addresses: What’s the Difference?
Blockchain Basics from The Block Audit
Guest post from Jesse Gossman, The Block Audit
People often refer to bitcoin or crypto wallets and wallet addresses as the same thing in casual conversation. (I am guilty of it as well.) It’s easy to use “wallet” as shorthand for a “wallet address,” but understanding the distinction is essential to grasping how these terms interact in your investigation.
The ability to articulate two seemingly disconnected wallet addresses as belonging to the same wallet instantly proves continued ownership and control, even when the trace looks like it’s gaining distance from the initial crime. This is especially helpful for proving a wallet on the other side of a bridge is still controlled by the same person.
A wallet is a central access point used to organize all your individual wallet addresses (or public keys) with their corresponding private keys. Most modern wallet applications simplify this by creating all wallet addresses from one master private/public key pair; these are called hierarchically deterministic or HD wallets.
Hierarchically deterministic is just a nerd word for the idea that you can create new generations of key pairs as descendants of the originals. Think of the hierarchy like a family tree — each generation determines what the next will be. This advancement allows one set of seed phrases to control and reconstitute an unlimited number of different wallet addresses. It doesn’t even matter what blockchain they are created on.
Think of it this way: The seed phrases act as a known starting point in an HD wallet. Each blockchain will have its own instructions for creating wallet addresses specific to that chain, so they may look completely different from one chain to another. (EVM or Ethereum-based chains will all be the same address beginning with 0x.) They can look different because they had different directions from the starting point. In reality, this results from different hashing algorithms and processes acting on the same starting point.
The takeaway: The ability to articulate wallet control is what preserves your case, not simply control of the wallet address. There is an entire field of study behind this process which you may recognize as clustering — a topic for another post.
Jesse Gossman is a co-founder of The Block Audit, which equips local law enforcement agencies with cryptocurrency resources, training, and tools to recover victim funds, close cases, and better serve citizens.
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