Section 2 · Lesson 2.1
Addresses, keys and signatures: what a wallet is made of
Before you can read the blockchain, you need to learn its "alphabet": what an address is, where it comes from, what a private key is, and why a transaction can't be forged. Without this foundation, AML analysis turns into guesswork.
1. The private key — the one and only secret
At the core of any crypto wallet lies a single random number — the private key. It is an enormous number (256 bits — roughly like picking one grain of sand out of all the grains in the observable Universe, several times over). From the private key a public key is derived mathematically, and from that an address. The reverse path is impossible: knowing the address, you cannot compute the private key.
Private key
secret, 256 bits
→
Public key
→
Address
0x… — public
Why this matters for AML. An address is a pseudonym behind which stands the holder of the private key. The analyst doesn't know the owner's name, but sees everything the address does. All of blockchain analytics is about linking pseudonyms to one another and to real-world entities (exchanges, services) by behaviour and labels.
2. What an address looks like in different networks
- Ethereum and EVM networks (BSC, Polygon, Base, Arbitrum…)An address like
0x1E227979f0b5BC691a70DEAed2e0F39a6F538FD5 — 42 characters, starting with 0x. ONE address works across all EVM networks, but its histories in each of them are different.
- BitcoinAddresses like
bc1q…, 1…, 3…. A user usually has many addresses at once.
- TRONAddresses like
T…. This is where the bulk of USDT-TRC20 lives — the favourite instrument of P2P and cash-out schemes.
- Solana / TONTheir own formats; an account model with its own specifics (covered in Section 10).
A common beginner's mistake. The very same EVM address exists on Ethereum, BSC, Polygon and dozens of other networks. An address that is "clean" on Ethereum may have a dirty history on BSC. Always check the address on the exact network where the deal is taking place.
3. The signature: why a transaction can't be forged
To send funds, the owner signs the transaction with the private key. The network verifies the signature with the public key and confirms that the instruction comes from the address's owner — while the private key itself is never transmitted. Forging a signature without knowing the key is impossible.
An important conclusion follows: every transaction in an address's history really was authorised by the owner (or by whoever gained access to the key — for example, through phishing or a drainer). So "empty" or strange transactions in a history are not accidents but someone's deliberate action.
4. Custodial and non-custodial wallets
- Non-custodial (MetaMask, Trust, Ledger)The private key is yours. You are fully responsible for security and for what you accept. This is exactly where checking incoming funds matters.
- Custodial (an exchange account)The key is managed by the exchange. It applies KYT and can freeze your deposit. Your "address on the exchange" is a deposit address, and the exchange sweeps its funds onto its own hot wallets.
The link to checking. When you withdraw crypto from an exchange, you get a "clean" history with the exchange's label. When you accept coins from a stranger in P2P, the history has to be checked, because anyone at all could be behind that address.
Lesson summary
- A wallet = private key → public key → address. There's no way back.
- The address is a public pseudonym; only the exchange, through KYC, knows the owner's name.
- One EVM address lives on many networks with different histories — check the network you need.
- Every transaction is authorised by the key — "strange" entries in a history are always someone's deliberate action.
This material is for educational purposes.