I got myself a brand new shining Bitcoin address that starts with my name as the first six characters after the initial “1″. Here it is:
And here is a QR code for this:
I used the great service at “Bitcoin Vanity” for finding this particular address. They charged me only 0.004 Bitcoin, which is around 50 cents now. Ordering the address and calculating the resulting private key was a very smooth process. I would also like to mention that with their setup they never get the private key for this address themselves. At least that’s what they say, and I don’t have any reason not to believe that.
This is called a “vanity” address. But I think there are very good reasons besides wanting to see your name more often for having such an address. It has a number of advantages over a random address.
For one, it is easier to remember. I can just remember the “1KfLenz” part. Then I can head over to blockchain.info and search with that, which gives me a page containing the full address as well as the transaction history of that address.
That of course means I can write down just “1KfLenz” and be done when I want to communicate that address to somebody else. This is basically the same advantage as a URL shortener gives me. I am running my own URL shortener for most pages I reference in my writings or in classroom scripts. For example, my second global warming science fiction novel “Tasneem” (FREE PDF file available!) gets “k-lenz.de/7″ as an URL, which is slightly shorter than “k.lenz.name/LB/?p=9141″, and more convenient.
Another way to think of this is as a parallel to domain names. Those are easier for people to remember, compared to IP numbers. That’s why we have them.
And there is another big advantage. Not for me, but for people using Bitcoin for larger payments.
Assume that buyer A (based in Germany) paid EUR35,000 to the Bitcoin address of seller B (based in Japan). Then, all of a sudden, B complains that the funds have not reached him. A would need to prove that he has paid in any later lawsuit. With a traditional bank transfer he would of course have the bank records to prove his payment. Under current international regulations all wire transfers come with names of both parties attached, so as to prevent money laundering.
The latest international standard requiring this is recommendation 16 in the February 2012 recommendations of the Financial Action Task Force against money laundering. As an aside, let’s just note that these don’t mention Bitcoin yet. It was able to fly under the radar at the time. Under that standard, information on the beneficiary needs to be kept with all wire transfers.
The EU is not yet requiring keeping records on payees. Right now Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfer of funds requires records only on the identity of the payer. But this is supposed to change, the Commission has proposed changing the rules to require also records on the payee.
Anyway, with a bank wire transfer, usually A will be able to just point to the bank transaction records. He doesn’t need to insist on a receipt, which may be difficult to get with B sitting at the other side of the World.
But with a Bitcoin address? How exactly does A prove that the address he sent his Bitcoins to actually belongs to B?
That becomes much easier if the address in question identifies B as the payee in its first characters, and B has published it in different ways he can’t change later. For example, if you tweet some address, you can’t edit that later. For example, if B has registered that address with some third party which does not change anything later on request, that would do the trick as well.
One may also note that this adds some security, especially if the address in question is longer.
Anyone can find another address with “1KfLenz” as the first seven digits. But searching for “1KfLenzmPC” (only three digits more) would already cost over 700 Bitcoin, or over $70,000 at the excellent service provider “BitcoinVanity” I bought my address from. Searching for “1KfLenzmpCE” (four digits more) is too difficult for them to even quote a price. The difficulty goes up very fast with only a couple of added digits.
So if some large company you may have heard of gets “1CocaCoLa777″ (11 digits) for its address, anybody trying to direct a payment to another address starting the same way would need to invest substantial funds to find it. That would deter most people from even trying.