SHA-256 is used to generate wallet addresses from public keys through a process called "hashing". Here's a step-by-step explanation:

1. _Public key_: A public key is generated from a private key using elliptic curve cryptography (ECC).

2. _Hashing_: The public key is hashed using SHA-256, which produces a fixed-size string of characters (256 bits).

3. _Address encoding_: The hashed public key is then encoded using a Base58 encoding scheme, which converts the binary hash into a readable string.

4. _Wallet address_: The resulting string is the wallet address, which is unique and secure.

Using SHA-256 to generate wallet addresses ensures:

1. _Uniqueness_: Each public key will produce a unique address, preventing address collisions.

2. _Security_: SHA-256 is a cryptographically secure hash function, making it difficult for an attacker to reverse-engineer the public key from the address.

3. _Efficiency_: Hashing reduces the size of the public key, making it easier to store and transmit.

By using SHA-256 for wallet address generation, cryptocurrency wallets can ensure secure and unique addresses for users to receive funds.