Public keys and private keys play essential roles in Bitcoin wallets. They enable you to access your bitcoin stored on the blockchain.
Read on to learn about cryptographic public and private keys and the role they play in Bitcoin wallet management.
What Is Public Key Cryptography?
Public Key Cryptography (PKC), also known as Public Key Encryption or Asymmetric Encryption, is a system that validates data authenticity. It allows confidential and secure communication in a public network and enables unidirectional state transitions, making reversing the process virtually impossible.
PKC uses private and public keys, which are mathematically related but different. Let’s examine each of these keys.
What Are Private Keys?
Private keys, which are long, complex, random sequences of letters and numbers stored in your wallet, grant you access to your blockchain address and crypto assets.
Private keys prove ownership of digital assets that live on the blockchain. So, when you say you own bitcoin, for example, what you own is the private key that demonstrates ownership of that asset.
When you open your wallet, you will find a seed phrase that represents the private key in a more straightforward format. Seed phrases consist of 12, 18, or 24 words and are used to recover private keys.
What Are Public Keys?
Public keys are long strings of cryptographic code used to encrypt sensitive information and verify digital transactions. They are generated through complex algorithms and can be shared publicly on the blockchain without compromising security.
Public keys are used to generate wallet addresses. Like the private key, the public key is long and difficult to record. Therefore, when sending and receiving assets, you interact with the blockchain address, a hashed (compressed) version of the public key.
You will note that the blockchain address of the Xverse Bitcoin wallet starts with the number “3.” Addresses on other wallets can start with different numbers or letters depending on whether they are legacy wallets, SegWit, or Taproot-enabled.
How Do Bitcoin Wallets Use Public and Private Keys?
When creating a wallet, a well-secured true random number generator produces a private key. The Bitcoin wallet then uses this key to generate a public key, which is compressed to create a blockchain address. This alphanumeric series of characters is what you use to send and receive BTC.
You can generate a public key using a private key but can’t use a public key to generate a private key. Public and private keys cooperate to encrypt and decrypt messages.
To understand this concept better, imagine Alice wants to send 1 BTC to Bob.
First, Bob sends Alice his Bitcoin wallet address to enable the transaction. Next, Alice pastes the address in her wallet and uses her private key to sign the transaction. Note that the seed phrase isn’t directly used to sign transactions. However, someone can access Alice’s private key if they get her seed phrase.
The private key generates a signature containing transaction details. This acts like a digital fingerprint, proving to the blockchain that Alice owns the funds and wants to perform the transaction described in the message.
Once Alice has signed the transaction, it is encrypted by Bob’s public key and then broadcast to the network for verification. Nodes validate the transaction by checking that the signature corresponds to Alice’s public key and that Bob’s address exists. The nodes will confirm the transaction and complete the transfer if everything is valid.
To access the 1 BTC, Bob must use the corresponding private key to decrypt the transaction message.
How to Secure Your Wallet’s Private Keys
Private keys are essential because they allow you to access your Bitcoin assets. Anyone with access to the keys can easily access your funds. As such, you should always safeguard your wallet’s private keys using the following measures:
Back Up Your Seed Phrase
Your seed phrase is the gateway to your private keys. If your phone crashes, for example, you can’t access your wallet and seed phrase and could lose your assets forever. To avoid this, back up the seed phrase by writing it down on paper. Then, store this paper in a secure home safe. You can access your private keys on any device using your seed phrase.
Add an Extra Layer of Security
Use your wallet’s security features to add an extra layer of security. For instance, rather than relying on biometric authentication, you can improve the security of your wallet by creating a password or PIN. Ensure you save this password or PIN with a reliable password manager to avoid forgetting it.
Consider Cold Storage
Hardware wallets eliminate the worry of online threats by storing private keys and seed phrases offline. This is a suitable solution if you have accumulated a large amount of bitcoin or other digital assets. Still, you must back up your hardware wallet’s seed phrase on paper for easy private key recovery.
Use a Reputable and Reliable Wallet Provider
Store your asset’s private keys with a reputable and reliable wallet provider that offers several security features such as PINs, passwords, biometric authentication, and auto-lock timers.
Xverse: The Bitcoin Wallet for Everyone
Xverse is a market-leading Bitcoin wallet for anyone looking to protect their private keys with high-level security. It features multiple security components and enables cold storage access with Ledger device integration.
What’s more, the wallet app allows you to conveniently manage your Bitcoin-native assets, including Ordinal inscriptions, BRC-20 tokens, Rare Sats, and Runes in one place.
Download Xverse today to securely manage your Bitcoin assets.
FAQs
How do I get private keys for my wallet?
Private keys are randomly generated when you create a wallet. They allow you to manage your funds, sign transactions, and access the blockchain address. You can recover private keys through a 12, 18, or 24-word seed phrase, a simpler version of the typically long and complex private key.
Where are wallet private keys stored?
Private keys are stored in your wallet, whether mobile, computer software, or a physical device. You should observe security measures such as creating a wallet password, backing up the seed phrase offline, and using a trustworthy wallet provider to ensure secure wallet key management.
How does a private key look like?
A private key is a series of alphanumeric characters generated randomly by a wallet. For instance, Bitcoin’s private key is a 256-bit number, while Ethereum’s has 64-digit characters. The length and complexity of private keys make them hard to record, so they are represented in a simplified version known as the seed phrase.
Does each wallet have a private key?
Yes, every wallet generates a private key and a corresponding public key. This private key is represented in a less complicated format comprising 12, 18, or 24-word phrases. The phrase, better known as a seed phrase, can control multiple accounts in your wallet. However, a private key can only control one account each. That means a single wallet seed phrase can be used to recover the private keys for each account.
Is a private key the same as a wallet address?
While a private key and wallet address are composed of alphanumeric characters, private keys encrypt transaction messages. In contrast, wallet addresses send and receive bitcoin. A wallet address is a compressed version of a public key recorded publicly on the blockchain. On the other hand, a private key is secret and is used to create a public key.
How do crypto wallets store private keys?
Crypto wallets store private keys locally on your device, giving you complete control over your assets. The wallet provider doesn’t have access to these keys and doesn’t know what the alphanumeric characters are since they are randomly generated. To guarantee access to your private keys when you lose your device, back up the seed phrase by writing it down on paper.
What is the difference between your public key and wallet address?
A public key is a long succession of alphanumeric characters, while a wallet address is a compressed version. This wallet address is shorter and easier to record. It allows you to identify your wallet on the blockchain network and to send and receive crypto assets. Therefore, you can share with friends or family.
