You’ll be hearing a lot about not your keys, not your wallet/crypto if you’re just getting started in crypto. There are two types of keys and it is important to know which one is which.
If you are interested in one, you may have heard that a crypto wallet comes with a key. It actually comes with two keys, a public, and a private key. Both keys are essential, and each performs a different job.
What are the Public keys?
To send cryptocurrency to a wallet, the public key is used. The private key is used for verifying transactions and proving ownership of cryptos in that wallet. Say, you send a bitcoin to your friend, and the private key is required for “unlocking” these transactions and proving ownership of bitcoins in that wallet.
Your public key is your postal address. Anybody can access it and send items, such as cryptocurrency, to this address. It is similar to giving your routing number and checking account number to set up a direct deposit. However, they can’t withdraw money from your account or log in.
What are the Private keys?
The private key is only for the wallet owner. The private key acts as a password for your crypto wallet and should not be revealed to anyone. You must be aware that anyone who discovers your private keys will have full access to the crypto stored in your wallet. They can then do whatever they like with it.
Private keys can be described as numerical codes. However, you might not see your private key. Many wallet providers encode private keys in a way that makes it easier to remember and record.
To unlock your wallet, many wallets use a seed phrase. Also known as a secret recovery phrase, it is also used by some wallets. MetaMask or Ledger hardware wallet will assign you a string with random words to unlock/recover your crypto wallet. This user-friendly string contains your private key.
If you store your crypto in an exchange wallet, such as Binance or Coinbase, or with a broker, the company will hold your private key. Technically, they would be able to control your funds for you.
Technically, the function of your private key is to “sign off” transactions using your funds. Without your private key attached, transactions using your funds can’t be validated by the network. The public key encrypts transactions and can only be decrypted by the private key. This technology is sometimes abbreviated as PKC or asymmetric cryptography.
How to store your private key
One final point that must be mentioned is that your seed phrase or private key should not be revealed to anyone. It is important to write it down and keep it safe. Hackers often target digital copies of these digital documents.
