What You Need to Know About Public and Private Keys in Cryptocurrency World
If you ever come across blockchain technology, you must have heard of the public key and private key. You may have asked yourself what they are and why they are so important in the world of cryptocurrency. I can guarantee that you are using them if you are involved in crypto space. Public and private keys are considered an essential part of any crypto transaction. For you to send and receive crypto, you must use public and private keys. In fact, your crypto wallet address is derived from your public key!
This article covers the fundamental concepts behind public and private keys in plain English words without scratching any technical or mathematical parts. To understand the role of the public and private key, we need to understand a little bit about Asymmetric encryption.
What is Asymmetric Encryption?
Asymmetric encryption is also known as key-pairs that are created from various cryptographic algorithms. The key-pairs are composed of two things: a public key and a private key. The key-pairs enable users to encrypt and decrypt messages between two entities. For instance, let’s assume that you and I want to communicate across the network securely. To achieve secure communication, we need to encrypt our messages on the network. Otherwise, our messages might be captured across the network. However, to encrypt the message, we need to use public and private keys. Your public key could be thought of it as a lock where it cannot be opened without the key. Therefore, it is totally fine to share your locked lock (public key) with anyone. However, you must keep your private key safe. You should never share your private key with anyone.
The Role of Public Key and Private Key
Back to the example of sharing data on a secure network. Let’s suppose that you want to say “hi there” to me. To encrypt the message, we first need to share our public keys with each other’s, which could be done in a few ways that are out the scope of this article. However, let’s think of it as we would share it through email. At this point, we both would have each other’s public keys. Then, all you need to do is to encrypt your message with my public key and sign the encrypted message with your private key to authenticate the message that it has been sent from a valid sender to an intended receiver. The encrypted message is also called “cyphertext.” Therefore, your message can’t be read even if someone captures it during the transmission phase. Once I receive your encrypted message, I would not be able to read your message because it is encrypted. To decrypt your message, I must use the public key that you have shared with me earlier, which will transform the message back to its original form.
You need to be aware of two things
It is fine to share your public key with anyone in the world.
You must never share your private key with anyone, and it should be kept in a safe place.
How Public Key and Private Key are Related to Cryptocurrencies?
As we have mentioned earlier, every crypto wallet address corresponds to a public key and private key. Moreover, the crypto wallet address is derived from the public key. In other words, the public key must be hashed to generate the wallet address. Therefore, the public key (wallet address) can be shared with anyone. However, the private key of the address must be kept safe and never be shared with anyone. Like the previous example, both public key and private key are used to send crypto from one user to another. For instance, if you want to send me crypto, you must have my wallet address. Then, you needed to sign the transaction with your private key to authenticate the transaction. Once the transaction is signed, then it would be broadcasted to the entire blockchain network.
Each wallet address and its private key exist in the form of long unreadable text. Also, the long text or string can be represented in QR code format as well that can be scanned to send crypto.
It is highly recommended to store your private key in a safe place. There are many ways to save your private key. The most secure way is to write your private key on a piece of paper and store it in a dry and safe place, where anyone other than you can not access it.
I hope this short article helped you to understand the role of a public key and private key in the blockchain world.
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