What are Public and Private Keys? How Do They Work?

Key Takeaways

  • Public Key is a unique code that acts like your cryptocurrency address. Anyone can send cryptocurrency to this address, but they cannot spend it without the private key. Sharing your public key is safe. 
  • Private Key is the secret code that grants access and allows you to spend the cryptocurrency sent to your public address.
  • Public and private keys are essential for controlling your cryptocurrency. Whichever method you choose for storing your private keys (exchange or self-custody), prioritizing security is critical.

Understanding Public and Private Keys

Public and private keys areessential behind your cryptocurrency. Your public key acts like your crypto address – anyone can send you coins there. But spending those coins requires a private key, like a secure vault key. This key is never stored on the blockchain for maximum protection. 

You have two choices: manage your private keys yourself with a secure hardware wallet or use an exchange as a custodian, similar to a bank holding your cash. 

What is Public-Key Cryptography?

Public-key cryptography (PKC) secures data with a clever trick. It uses a public key to encrypt messages and a private key, protected by a one-way math function, to unlock them. This system lets you send confidential messages and digitally sign documents, ensuring authenticity and preventing tampering. PKC is a key player in online security.

What is a Public Key?

Public key is like your account number. It’s a unique code that anyone can use to send you cryptocurrency. Sharing your public key is safe, similar to giving out your email address. The real security lies with your private key, which acts like the key to your mailbox. Only with the private key can you access the cryptocurrency sent to your public address. This two-key system ensures you can receive funds while keeping them secure.

What is a Private Key?

Your private key is the essential component of your cryptocurrency holdings. It’s a secret code, like a strong password, that comes in various forms like a long string of characters or a QR code. This key is important for proving ownership and spending any cryptocurrency sent to your public address (like your account number). It’s mathematically impossible to recreate a private key from a public key, so keeping your private key confidential is absolutely essential for protecting your crypto funds.

Where are my Private Keys?

Your private keys, the secret codes for accessing your cryptocurrency, are stored in a cryptocurrency wallet. This wallet can be a mobile app, desktop software, or even a specialized hardware device. Unlike public keys which appear on the blockchain, private keys are kept securely within your wallet.

There are two main scenarios:

  1. Exchange-held Crypto: If you keep your cryptocurrency on an exchange, it acts as a custodian, holding your private keys similar to a bank holding your valuables.
  2. Self-Custody with a Non-Custodial Wallet: By transferring your crypto to a non-custodial wallet, you take control of your private keys. While the wallet manages them for you behind the scenes, you’ll be given a seed phrase – a set of words that acts as a backup for your private keys. 

Remember, this seed phrase is like the master key to your crypto, so keep it safe and confidential.

Final Thoughts

Public and private keys are the backbone of cryptocurrency security. Your public key acts like your crypto address—anyone can send you funds there. But spending those funds requires a secure private key. Unlike the public key, the private key is never stored on the blockchain for protection. Think of it as a vault key with unmatched security.

Whichever path you choose, security is important. Keeping your private key confidential is key to safeguarding your cryptocurrency holdings.

Via: 2Usethebitcoin.com

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