What Is Crypto Wallet, Encryption And Private-Public Keys
Part 1 of 3
The future points to a shift toward blockchain, where the Internet will be decentralized and so will our wallets. Think of your physical wallet today — imagine storing all your payment methods on a software program in a virtual crypto wallet. A crypto wallet is a piece of software that can hold multiple Externally Owned Accounts (EOA). Similar to how each credit and debit card in your wallet has its own ID and balance, each EOA is classified by different numbers and can be filled with varying amounts. You can use these accounts to perform transactions, send and receive Ethers, BitCoin or other cryptos. Refer to one of my Previous Articles explaining inherent accounts owned by Ganache (local blockchain). Ganache has fake ethers to enable deployment of Smart Contract (SC). Deploying an SC is a form of a transaction, and a transaction in the Ethereum world comes with a cost.
In the real crypto world, an EOA needs a place to park themselves to carry out real transactions. That’s where a crypto wallet comes in. A crypto wallet is a one-stop shop that manages various cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and more.
Another analogy is relating this virtual wallet to the bank. Your bank provides you with a unique account number when you open either a checking or savings account. The bank also keeps track of your credit and debit transactions. Similarly, when you open a crypto account, many hexadecimal numbers are generated in a pair of private and public keys. A public key is what you use to send transactions or provide to others for receiving money, and is visible to anyone. However, your claim to your public key is through a private key, sometimes called a mnemonic phrase. Anyone can send cryptos to your public account, but to claim these cryptos, a private key is needed to unlock an account.
Let me give you another analogy to further familiarize you with this topic. Your email IDs are public and anyone can send an email to you, but only you can open your email account through your unique password. If anyone else knows your private password, they can access your entire inbox.
If you lose the private key, you lose all of your cryptos. Unfortunately, there is no way to recover the funds. Therefore, it is crucial to keep your private key extremely private.
What Is Encryption
Public and Private keys are nothing but an encrypted version of your plaintext messages. The word encryption comes from the Greek word Krypto’s. The art of encryption is as old as the art of communication. At one point in time, writing a message in simply a readable form was sufficient. However, as civilizations developed, the need to securely transport messages from one end to another surfaced.
For example, the Romans used what they called the Caesar cipher, the Caesar code, or a shift cipher developed by Julius Caesar.
It was one of the simplest and widely-used encryption techniques where each letter in the plaintext is replaced by a letter with some fixed number of positions. For example, T will be replaced by W in the case right shift of 3 is used. C will be replaced by F.
Plaintext: what in the world encryption means
CipherText: zkdw lq wkh zruog hqfubswlrq phdqv
Word Cipher comes from Arabic word sifr, meaning empty or zero.
Encryption is widely used on the internet to protect user information from being sent between a browser and a server. This information may include a password, payment or any other personal information.
In the next article, I will show you how to create a simple wallet, explain in detail about Public and Private keys.
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