Our hangovers from the use of the fiat currency have led to huge misconception and misunderstanding of the Bitcoin ecosystem and in particular how a bitcoin wallet works. There is nowhere that our old understanding of how money should work than in the use of our public addresses.
The confusion begins with the naming. The Bitcoin wallet is a not a wallet but a key chain. Furthermore, the public address is not really an address, at least not in a traditional way. It is not supposed to function like your email address or your PayPal username.
You are supposed to use every public address only once. Nevertheless, nothing has stopped bitcoin users to use a bitcoin address the way they use an email address. The technology allows it anyway. That said, it is a bad practice.
This is majorly for two reasons; privacy and security.
To understand how reusing your bitcoin address affects your privacy and that of other users who transact with you need to understand how far the anonymity goes in bitcoin transaction.
It is critical to marry the public ledger and the anonymity that Bitcoin is supposed to offer its users. First and foremost, bitcoin transactions are anonymous as long as someone is not able to match an identity to a public address on the blockchain.
Remember that the blockchain, where every transaction is posted, confirmed and recorded, is public. All and sundry can see the public receiving and sending bitcoins all the transactions if they want to.
By using the same address to receive and send funds you increase the chances of someone to find out who you are without a little effort. This is not only bad to you but also to anyone who sends or receives money from you.
Therefore unlike a bank where your earnings and expenditures are private, reused bitcoin address gives the public access to your earnings and expenditures
You always have to use private keys to prove ownership of bitcoins on the blockchain. If you lost ownership of this private keys or someone gets them from you in one way or another, then the bitcoins associated with the corresponding public keys ceases being yours.
The easiest way to lose them is if you record them somewhere and someone comes across them, they are taken from you by force or someone hacks your computer and accesses files with the keys.
However, while not very common, it is possible for very technically knowledgeable hackers to reconstruct your private keys by comparing data exposed every time you sign a transaction for the same public key.