Public, as well as private keys play an essential role when it comes to the usage as well as maintenance of numerous cryptocurrency wallets.
In fact, every single time someone wants to send or receive a cryptocurrency, either from a user within a peer-to-peer (P2P) network or through an online cryptocurrency exchange, they will require and utilize these keys. What this means is that if you want to buy Bitcoin, or buy crypto currencies, you will need a private key to access them.
However, very few truly understand what public and private keys are and how they work as a whole. As such, today, we will be diving into everything you need to know when it comes to public and private keys.
Cryptographic Keys Explained
Cryptography is essentially the science of secret writing, with the main goal of keeping any data as secretive as possible. It is classified into symmetric cryptography, asymmetric cryptography, and hashing.
A cryptographic key is a piece of information that is utilized to scramble data in a way through which it can appear to be random, and it is often a large number or a string of numbers as well as letters.
When data is not encrypted at all, it falls under the category of plain text. This is then put within a cryptographic algorithm using the key, where the plain text comes out as randomized data. Anyone that has the proper key through which they can decrypt the data can put it back into its initial form, which was plain text.
What are Public Keys?
Public-key cryptography, or PKC for short, is a technology that is utilized to validate the authenticity of data through the utilization of asymmetric encryption.
This technology was initially utilized to encrypt as well as decrypt messages within traditional computing; however, today, it is utilized throughout the crypto space for transaction purposes.
Within the sphere of cryptocurrency transactions, a public key essentially allows anyone to receive cryptocurrency transactions. The cryptographic code is paired to a private key.
Anyone can, at any point in time, send transactions to a public key. However, they need the private key in order to unlock the cryptocurrencies that were sent there. This is how owners of a specific cryptocurrency wallet can prove that they are indeed the owner of the said wallet and have indeed received the transaction.
What this means is that the public key can be seen as an address to which the cryptocurrencies can be sent.
What are Private Keys?
There is a reason why every single online wallet you create, or online account at an exchange or brokerage you make, advises you to never share your private keys with anyone, and this is due to the fact that private keys play the most important role within the crypto space.
A private key gives you the ability to essentially prove that you are the rightful owner of the cryptocurrency wallet in question and will enable you the ability to spend any of the cryptocurrencies that are connected within the public address.
In other words, the only way through which you can validate cryptocurrency transactions that you make anywhere is by writing down the private keys whenever you are asked for authentication. A private key can be a 256-character long binary code, a 64-digit hexadecimal code, a QR code, or a mnemonic phrase.
No matter what kind of form they come in, private keys are typically a large number, and their main role is to protect your cryptocurrency wallet as much as possible.
The Utility of These Keys
For a transaction to essentially occur and be completed on top of a blockchain network, it needs to be signed.
In other words, it is a complex procedure that involves multiple parties and has to be completed through the utilization of public and private keys.
A transaction gets encrypted by leveraging the aforementioned public key, and this transaction can only get decrypted by the accompanying private key.
The transaction then gets signed using the private key, which in turn proves that the transaction has not been modified. The digital signature is then generated by combining the private key with the data that is sent within the transaction, and it can be verified as authentic through the utilization of the public key.
Any cryptocurrency wallet owner can digitally sign a transaction to prove that they have ownership over funds. Nodes can even check and authenticate transactions automatically, and any transactions which have not been authenticated by the private key are rejected by the network. Any transaction that is legitimate, and mined on top of the blockchain network, is irreversible, as there is no “undo” button, which is why it is always important to double-check the public key of the recipient before sending a transaction.
Before you try to find the perfect time to actually invest in a cryptocurrency, ensure that you store your private keys securely. You can utilize tools such as ZenDCA to automate the process of investing in cryptocurrencies with repeat buy schedules, automatic withdrawals, and performance tracking.
Moving Forward with Security
The private keys are typically generated at the point in time of the creation of a cryptocurrency wallet, which can be a browser-based wallet, a desktop wallet, a mobile app-based wallet, or a dedicated hardware device wallet.
The private keys are not on the blockchain network; however, if you create an account at a cryptocurrency brokerage or exchange, they are the custodian of the private keys, which means that you are not in full control of your cryptocurrencies.
This is why it is always recommended to send cryptocurrencies such as Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE), or any other cryptocurrency, for example, from a custodial wallet to a non-custodial wallet, as within the non-custodial wallet, the users are in full control of the private keys and as such, have a higher level of security.
However, the highest level of security comes from dedicated hardware devices, as these can be completely disconnected from the internet. Public and private keys, as a result of this, play an essential role in the operation of a blockchain and in conducting cryptocurrency transactions safely.