Crypto EDU

Public and Private Keys

  • September 7, 2021
  • Intermediate
  • cryptocurrency
  • cryptography
  • security
  • technology
Priv Pub Keys Delivery (0-00-04-13)

The “crypto” in “cryptocurrency” comes from cryptography, the process of sending and receiving coded messages. In blockchain networks, the near-impossibility of cracking the codes that encrypt asset exchanges between parties is what keeps these transactions secure. To manage this, cryptocurrency networks like Bitcoin rely on something called Public Key Cryptography, also known as asymmetrical encryption.

To understand how it works, imagine person A wants to send person B an encrypted message through a public forum. To scramble the letters and protect the message, person A uses a code. For person B to decrypt the message, they need the code. But person A can’t send the code without revealing it to everyone else. One way to solve this problem is through asymmetric encryption. In this system, everyone has a public key and a private key—which are both files containing a seemingly random string of numbers and letters. Now, if person A wants to send person B a message, he must first ask her for her public key. Person A feeds the message through person B’s public key to encrypt it, and person B uses their private key to decrypt it.

When you create a wallet on a crypto network, the algorithm generates a public key and a private key, known as a key pair. Your public key and your private key are mathematically related. If you lose your public key, you can easily recover one using your private key; however, it’s not a two-way street. If you lose or forget your private key, there is no way to retrieve it

But that’s exactly what makes crypto such a powerful idea. Without your private key, no person or organization or government can freeze or seize your funds. And since you can, in theory at least, keep your private key in your head—though you’d need a really good memory—there is no way for someone to hack your account and take your money.

Why should you care about public and private keys?

If you’re going to be involved in cryptocurrencies, you need a public and a private key to do it securely. Keys are the reason you can send and receive cryptocurrency on the public ledger with confidence.

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