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What is the difference between a public key and a private key?
Public and private keys are two very relevant terms in the cryptocurrency space. The term pretty much explains the difference. One is public and one is private.
We see that a normal bank account uses account numbers that are linked to a specific name or debit card. In the world of cryptocurrency this works entirely different.
A cryptocurrency wallet consists out of a public and private key, similar to your bank account number and the pin code that you use to get acces to your account. To understand this better, we explain what the term ‘cryptography‘ means and what the relationship is with a public and private key and cryptocurrency.
What is cryptography?
Cryptography is something we use every day without really realizing. It forms the basis of the Internet, allowing us to browse the internet safely.
The adress bar of this page is a simple example of cryptography is. 2 things are visible; a small padlock symbol is visible before the start of the address https.
This indicates that the connection to a website is secure. This security is established with cryptography, by using public keys that encrypt all data. This encryption or encoding of data is essential to the security of the internet users.
What is a private key?
A private key consists of a series of random numbers/letters issued by an exchange or wallet issuer. It contains your cryptocurrency, which you can send and receive. It is not possible to decipher a private key, thanks to the strong encryption model behind it.
It is very important to save your private key in a secure place, as it can be used as a backup to access your wallet. Losing the private key means you can no longer use the wallet and lose your cryptocurrency!
It’s important to never share your private key on any website, or with anyone.
What is a public key?
A wallet has a public key next to a private key. A public key is one of the two keys used to encrypt data. The private key is used for mathematical derivation of the public key. Unlike the private key, which must remain completely secret, the public key is made to share with other people, who want to send cryptocurrency to your adress.
Public keys are thus derived from private keys.
The other way around is not possible, because if this was possible your cryptocurrency could be stolen the moment your public key is known to others. Cryptocurrencies solve this problem by using a complicated mathematical algorithm to generate the public keys. The algorithm makes it very easy to generate public keys from private keys, but the algorithm makes it virtually impossible to achieve the opposite!
Examples of public and private keys
To make this all a little more tangible, an example of both a public and private key is given below:
Fun Fact: The public key above is a public key from a Bitcoin address. You can recognize it by the fact that it starts with a "1". Bitcoin public keys always start with a 1. Bitcoin private keys always start with a 5. So the private key above is not a Bitcoin address.
A cryptocurrency transaction is always sent to and received by public addresses. All transactions made on the network are recorded on the blockchain. Public addresses are related to the public keys. They are a “hash” of the public key.
To release or authorize a transaction, you must provide the private key to unlock the assets on the blockchain at the specified address. It is safe to share public addresses with others. This is because it is mathematically impossible to decipher the private key from a public key.