What Are Private Keys?

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Good morning everyone! As cryptocurrencies are becoming more and more shared among people, I think it is important to cover a very important topic for the security of your cryptos: The Private Keys!

What is a Private Key?

When you purchase crypto, you’ll be issued a public key and a private key. The public key works in a similar way to an email address and allows you to safely send and receive funds. Public keys are visible to everyone and are used to identify your wallet.

The private key is a unique combination of numbers and letters that unlocks your virtual crypto vault. Private keys are often also referred to as “secret keys” For obvious security reasons, it is not possible to generate your private key from a public key. Private keys are typically very long strings of numbers that would be almost impossible for anyone to ever guess. As long as you are the only person with access to your private key, your coins are secure in the vault.

A private key also enables you to digitally sign transaction statements. Put simply, a transaction is just a signed statement on a blockchain that adds coins to a new address. Private keys act as “proof” that you own that blockchain address. It’s completely safe and necessary to share your public key with others. But you should never share your private key. If someone gains access to it, they’ll be able to control your wallet and the funds inside. Most crypto wallets nowadays support seed phrases that leave less room for human error. Seed phrases, also known as recovery phrases, are a collection of words that can be used to access your wallet.

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Why are private keys important?

Private keys are one of the cryptographic features that make decentralized, digital financial systems possible. Without them, the crypto space would be much less secure. Cryptocurrencies like Bitcoin and Ethereum are decentralized which means that there is no central authority or bank storing your money. Instead, your coins are stored on a blockchain network.

While this means that your funds are protected from central authorities, it also means that there is no third-party protecting your wallet. Instead, private keys are used to keep your crypto secure.
Furthermore, blockchains are open and all public keys and transaction data are visible to everyone. Private keys, on the other hand, are completely anonymous.

While everything is visible, it’s also pseudonymous as you don’t need to provide personal information like a name or address to use crypto. As there is no personal information or centralized party, there is no way of accessing your private keys if you lose them. This is one of the main differences between private keys and regular passwords, which can be reset through your email address.

VERY IMPORTANT: If you lose your private keys, you lose access to your funds!

Today we introduced what Private Keys are, in the next dedicated article we will see what are the best ways to store our Private Keys.

So, be sure to follow my profile to get the notification of my new articles!

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