Public and private keys: what you need to know
Even considering the cryptography science behind cryptocurrencies, the latter still function like fiat money. You can buy goods or services with them, invest, or trade. And, just like fiat, cryptocurrencies may be misspent, lost and stolen if not handled properly. Public and private keys operate as both the safe and the keycode needed to access our funds, yet many cryptocurrency users are oblivious as to how to use them right.
Keys in cryptography are used to encrypt and decrypt data. They are composed of strings of integers either created randomly through a random number generator (RNG) or manually by a user. The primary purpose of such keys is security through data encryption. Cryptocurrency users are able to conduct transactions by using both a private key and a public key, yet the two are substantially different.
All cryptocurrency owners have a private key, which is necessary to access cryptocurrencies stored in a wallet. They function as the digital equivalent of a signature, which cannot be forged. It is used to access funds as well as conduct transactions, and therefore should be kept secure in order to prevent loss as well as theft.
If a cryptocurrency owner misplaces their private key, they can no longer access their funds, similar to a pin number used to access bank accounts. Unlike pins, which can be changed by contacting a bank, a private key is much more difficult to recover.
How can someone conduct a transaction without knowing where to send funds? This is why public keys exist. Public keys can best be compared to public addresses. They’re stored in directories that anyone can have access to, much similar to the white pages of a phonebook.
How they work together
A public key is derived from a private key, meaning elements of a person’s private key are integrated into their public key. It is because of this that funds or data can be transferred securely. But wouldn’t someone be able to discover a person’s private key based off of their public key? No, mainly because the algorithm that creates a public key moves in one direction only, and is so complicated that the odds of determining a person’s private key from their public key are nearly zero.
The science behind it is extremely complex, but can be simplified in the following way. John wants to send data to Jane. So, by constructing a code with the data and Jane’s public key, which is derived from her private key, John is basically building a box only Jane can open. John’s box is constructed of three things: the data or funds John wishes to send (the contents of the box), Jane’s public key (the box itself), and a small portion of her private key (the lock on the box).
John only knows Jane’s public key, or her address. Jane’s address is composed of random portions of both her public and private key. Jane receives the funds and only her private key can be used to open the lock on John’s box. This is an extremely simplified analogy of how keys function when transferring cryptocurrencies or information.
The key to understanding crypto
Unless someone has a degree in cryptography or at least a considerable interest in it, the way public and private keys function can be difficult to understand. However, if you remove the cryptocurrency jargon and replace it with words or ideas the average person is more likely to fathom, the information is a lot easier to retain. As stated earlier, this knowledge isn’t required to utilize cryptocurrencies, but comprehending it definitely gives a person peace of mind as far as cryptocurrency security is involved.