Summarize with AI
A public and a private keys work together to secure your crypto wallet and authorize transactions on the blockchain. The public key you can share openly to receive funds. But the private key should be kept a secret. You use it personally, so never share your private key, as it grants access to your funds.
This guide explains how these two access codes are generated, how they work together, and how to protect your funds.
Key Takeaways:
- Public keys can be shared freely; private keys must remain secure.
- Keys are generated through cryptographic processes.
- Protecting your private key is critical to securing your assets.
Understanding Public Keys
The whole key pair thing is taking place because of an encryption technology. One code is generated from the other, making all your data connected but still encrypted from the prying eyes.
What is a Public Key?
A public key is a cryptographic string. Basically, it is a part of an address that users share to accept transactions.
Public codes are mathematically linked to private ones, but no one can use them to get the access code itself. An easy analogy is your full name: you can share it with others to receive funds, but it doesn’t give anyone access to your money.
For example, a Bitcoin shared key looks like a long hexadecimal string: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa).
How Public Keys Work
Shared identifiers are generated from the private through an elliptic curve cryptography (ECC) algorithm, specifically using the ECDSA (Elliptic Curve Digital Signature Algorithm). The mathematical security magic is possible exactly because of this algorithm.
The public access code serves as the foundation for generating a blockchain address. If your private key is analogous to your ID, then your public key is your name, and your address is your bank account, opened in your name.
Understanding Private Keys
Your private key equals your money. Please be serious and mindful about them.
What is a Private Key?
A private key is a cryptographic string, typically a 256-bit number represented by 64 hex characters. It is used to authorize transactions and prove ownership of blockchain assets. Think of it like an ID and PIN code to your bank account combined—without it, you can’t access your funds.
Your main access code creates your digital identity on the blockchain, giving you full control over the associated wallet and assets. Never share your it with anyone – not exchanges, wallet providers, or customer support. Its only purpose is to access your money, and who, besides fraudsters, would need it? But if you lose it, you lose your funds permanently.
How Private Keys Work
Let’s say you want to send 0.1 bitcoin. Your wallet signs the transaction with your private key, creating a unique digital signature. This signature proves that the transaction was authorized by the owner. The network then verifies the signature with the public one to ensure the transaction’s authenticity.
Importantly, only the signature is visible to the network, not your private code itself. This process secures your funds, as only the person who holds the access code can authorize transactions. It’s like a personal password plus an actual legal signature—whoever controls it has access to the associated assets.
How Private Keys are Generated
Private keys are generated by creating a random 256-bit number through a cryptographically secure random number generator (CSPRNG). This number is then used in the elliptic curve cryptography (ECC) algorithm to generate a corresponding public one. Since the key is created randomly, it’s practically impossible to guess.
While registering a wallet, you’ll receive a backup .txt file containing your private access code. In parallel, there was generated a seed phrase. You can find it in your wallet, page “Privacy and Security.” Surprisingly, the seed phrase generates the string of numbers. 12 or 24 words out of 2048-word dictionary are compiled randomly to ensure that your combination is unique.
The Relationship Between Public and Private Keys
How Public and Private Keys Work Together
When Alice wants to send you 0.5 BTC, you provide her with your address and public key. Alice then signs the transaction using her private key, confirming her ownership and authorization. The network then authenticates the transaction using your’s public key. This process means that only Alice, who has the corresponding private one, can send funds, and you can securely receive them. Your private access code stays with you, as does Alice’s.
Key Pair in Cryptography
In asymmetric cryptography, two mathematically related keys are used. Unlike symmetric ciphers, where the same code is used for both encryption and decryption. The asymmetric setup is commonly used in blockchain, SSL protocols, and email encryption because it’s safer. The private keys are never transmitted over the network, making them less vulnerable to interception or theft.
Comparison Table: Symmetric Cipher vs Asymmetric Cryptography
| Feature | Number of Keys | Key Sharing Required | Used in | Example |
| Symmetric Cipher | 1 | Yes | Data encryption | AES |
| Asymmetric Cryptography | 1 | Only public key is shared | Blockchain, SSL, Email encryption | RSA |
Differences Between Public and Private Keys
Let’s wrap it up with understanding the major differences.
Visibility
A public code is visible to anyone who needs to send cryptocurrency to a wallet, while a private one remains confidential, known only by the wallet owner.
Purpose
The public identifier is used for receiving and verifying funds, while the main key is used to authorize transactions, essentially controlling the associated assets.
Function in Blockchain
In blockchain, the public key allows users to receive transactions, while the private one allows them to sign and send transactions. There is a difference: are you willing to get money in or get it out.
Security Risks
There is no risk in sharing your public key, otherwise it wouldn’t be public. But the private access code is the most important piece of data for securing crypto funds. If exposed, anyone can access the associated wallet.
Reversibility
Transactions are irreversible, and the public identifier does not affect the process at all.
Common Myths and Misconceptions
Myth 1: “My public key is my wallet address.”
This is not true. The wallet address is mathematically related to your public key, but it is a variation of it. The address is hashed—it’s shorter, more practical, and more secure since it’s not your key itself. The address is what you use to receive funds; the shared key is what you provide to verify transactions.
Myth 2: “A hardware wallet stores my crypto.”
No, hardware wallets do not store your cryptocurrency since it is an offline technology. Your crypto is stored on the blockchain. The hardware wallet stores access to your crypto: your private key and lets you sign transactions and prove ownership.
Myth 3: “Sharing my public key is risky.”
This is a misconception. The public key is designed to be shared, as it only allows others to send their funds to your wallet, not to get yours.
Myth 4: “An exchange holds my private key for security.”
Depends on custodial vs. non-custodial wallets. In a custodial wallet, like those provided by exchanges, they control your private access codes. It’s easier to use, making it great for beginners who are taking their first steps in crypto. If you choose a trusted provider, then it becomes responsible for your security. With non-custodial wallets, you hold your key, meaning you have full control over your funds and you are the only one who will be accountable for your mistakes. It’s important to understand the difference and the risks involved.
Here’s the table in the requested format:
Public Key vs Private Key at a Glance
| Feature | Public Key | Private Key |
| Visibility | Visible to everyone | Kept secret, only known to the owner |
| Purpose | Used to receive funds and verify signatures | Used to sign transactions and access funds |
| Shareable? | Yes, can be shared freely | No, must never be shared |
| Stored Where? | Can be stored in a blockchain address | Stored securely (e.g., in a hardware wallet) |
| Generated From | Derived from the private key | Generates from the seed phrase |
| Risk if Exposed | No risk | Permanent loss of control over assets |
Security of Private Keys
Please consider all the safety measures from the list below as bare minimum. You cannot oversave the main piece of data in your crypto journey.
How to Keep Your Private Key Safe
- Keep your seed phrase offline. For instance, write it down on paper and store it in a fireproof safe.
- Use a hardware wallet to store your private data offline. This keeps your key away from potential online threats.
- Never enter your private key on websites. Avoid any platform asking for it, as it’s a major security risk.
- Never send your private key via email, Telegram, or support chats. These are not secure methods of communication.
- Enable 2FA on custodial accounts (e.g., exchanges) as an additional layer of protection for your accounts.
- Create multiple physical backups of your seed phrase and store them in different, secure locations.
By following these steps, you can significantly reduce the risk of losing access to your cryptocurrency.
Risks of Losing Your Private Key
If there is no private key, there is no way to recover access to your funds. In non-custodial systems, there is no customer support or “account recovery” process to help you regain access.
Chainalysis’ expert research says that around 2.3 million to 3.7 million BTC are lost forever. Just imagine almost 20% of the 21 million Bitcoin maximum supply is considered gone due to the loss of main keys.
The only way to recover access to your funds is through your seed phrase. Without it, your money will remain permanently locked away.
Real-World Applications of Public Key Encryption
From the emails we send to the websites we visit, encryption is a regular part of our day-to-day lives. It works behind the scenes and provides a safe environment for digital transactions, communications, and browsing.
Digital Signatures
When a user initiates a transaction, their private key generates a unique digital signature for the transaction. This signature can then be verified by anyone with the corresponding public identifier.
This system makes blockchain networks like Bitcoin and Ethereum open and trustworthy, so people can check that transactions are real. Digital signatures make sure that only the person who owns the key could have started the transaction. The shared one lets other people check if it is valid.
Secure Sockets Layer (SSL)
SSL/TLS encryption is exactly the same method as a key pair in crypto. It protects internet connections by using to kinds of codes, so a user’s browser and a server can talk to each other safely. During the process, the browser gets the server’s public key, encrypts the session key, and sends it back to the server. The server uses its private key to decrypt this session. And now they have a secure channel for communication.
Email Encryption
We are not done yet. Email encryption works by key pairs as well.
The sender uses the recipient’s public key to “lock” the email, and only the recipient can “unlock” it. It’s like sending a letter in a safe that only the right person can open.
Virtual Private Networks (VPNs)
VPNs are the most visual representation of that process. What happens is they use both public and private key encryption to make sure that the user can connect safely to the whole internet.
The client starts the process and checks the server’s public key. After it is verified, a shared session key is set up, and the rest of the communication is encrypted with symmetric cryptography. The private one decrypts data, which guarantees that only the particular person can read it. That way the user’s information is kept secret.
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FAQ
A public key is used for receiving and verifying transactions, while a private one is used to sign and authorize transactions.
It gives full control over your cryptocurrency. It is used to sign transactions, proving ownership. If you lose your private access code, you lose access to your funds.
No, sharing your public key is safe. Only the private one can authorize spending the funds. Knowing the public key alone does not allow someone to reverse-engineer another.
The only way to restore your access is by seed phrase. But if you’ve lost your key and seed phrase, it means you’ve lost your cryptocurrency forever. No one, including exchanges or developers, can recover it.
Use a cold wallet. The hardware one or the paper one will do. Do not store it on any device connected to the internet, and never share it with anyone.
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Further Reading and Resources
For more information on public and private keys and blockchain security, check out these resources:
