All Bitcoin users have unique private and public keys. Find out what those keys are and how they work in Bitcoin transactions.
Bitcoin has inspired robust transformations in the global financial landscape. It has revolutionized how people send, receive, and manage money, advancing the digital economy. Unlike fiat currency transactions that involve a lot of paperwork and intermediaries, Bitcoin allows its users to send, receive and store money digitally, without any third-party involvement and paperwork.
A Bitcoin wallet is an essential requirement for transacting crypto. Users can acquire multiple wallets for free and at a small fee from various providers online. Each wallet generates a unique private and public key, crucial for securing transactions and the network. The following article discusses the two keys and how they work.
What is a Public Key?
A public key is a set of random numbers and letters unique to every Bitcoin wallet. Also known as a public address, it serves as the account number users share with others to receive Bitcoin. Sharing a public key is the only way to accept Bitcoin from another user. Similarly, other Bitcoin users can also share their public addresses with you to send them money.
If you run a business that accepts Bitcoin, you will need to share the public address with customers to know where to make the payments. Bitcoin’s blockchain validates all users’ public keys on a digital ledger to keep track of all transactions on the network. While the public key is a unique identifier of Bitcoin ownership, it does not reveal a user’s real-world identity.
Your Bitcoin wallet address is the hashed version of its public key. Each public key is 256 bits long, while the wallet address is 160 bits long. Bitcoin users can generate as many public keys as they need to transact. It is advisable to have multiple public keys for different transactions to ensure enhanced privacy. For example, you can have separate public keys for daily purchases, trading, and holding Bitcoin.
Using different public keys each time makes it extremely difficult for bad actors to track your transactions and unearth your real identity. Check bitcoin buyer to find a reputable Bitcoin exchange platform.
What is a Private Key?
As the public key, a private key is also a string of random numbers and letters. However, it is exclusively for spending Bitcoin. The private key provides proof of the ownership of a given wallet address, allowing you to spend the funds therein. A private key is the only way to unlock and access the funds held in a Bitcoin address related to it.
Anyone with your private key can transact through your wallet. Experts advise all Bitcoin users to keep their private keys confidential. Private keys are relatively more extended, more complex, and can take various forms than public keys. The most common forms of private keys include a 256-character-long binary code, one 64-digit hexadecimal code, a QR code, and a mnemonic phrase.
While generating a public key with a private key is possible, the opposite is impossible. That is mainly due to the private key’s strong encryption code base. Wallet owners use a private key to sign Bitcoin transactions, proving that the funds are genuine and not modified. The digital signature originates from combining the data sent in the transaction with the private key.
Bitcoin transactions are only complete after signing. Validated transactions are irreversible. People store private keys in a crypto wallet, which could be a mobile app, desktop software, or hardware device. However, cold storage is the safest option.
Overall, private and public keys enable you to spend and store the funds associated with your Bitcoin wallet address safely and efficiently.