Digital wallets for cryptocurrencies are protected mainly by public and private keys. They’re used to encrypt and decrypt sensitive data necessary to keep your account secure and anonymous.

The private key is used to decrypt data. It’s paired with a public key, and no other key will be able to decode data encrypted by the public key other than the matching private key. They’re like verification codes needed to access your funds in the blockchain.

• Public Key

The public key is used to encrypt sensitive data. It is known to everyone in the network because they need it to send you coins.

• Private Key

The private key is used to decrypt data. It’s paired with a public key, and no other key will be able to decode data encrypted by the public key other than the matching private key. They’re like verification codes needed to access your funds in the blockchain.

Unlike public keys, private keys shouldn’t be shared with anyone.

In cryptocurrency, the public and private keys are represented by mathematical formulas related to one another. Blockchains utilize different algorithms to generate public and private keys.

It’s virtually impossible to guess the matching private key using the info from the public key. This guarantees the security between transactions in a crypto network.

How It Works

In cryptography, every public key is matched with a unique private key. Information encrypted using a public key can only be decoded by the matching private key.

For example, take User A as the sender and User B as the receiver of the message.

When User A sends an encrypted email to User B, it’s secured using User B’s public key. No one in the network will be able to read it other than User B because they’re the only one to have the matching private key to decrypt it. When User B receives the message, they’ll use the private key which is only known to them to decrypt the message from User A.

When User B wants to do the same and send a message to User B, the same process happens, but this time, using User B’s public and private keys.

The purpose of having public and private keys is to prove that a transaction transpired within the network and wasn’t tampered with. At the same time, it ensures the safety and protects the identity of the users, staying true to blockchain’s promise of pseudonymity.

Ways to Safeguard Your Private Key

You can keep your private key using the following methods:

-          Online wallets

These allow the management of crypto assets using a web browser. This allows easy access from any device that can connect to the internet.

-          Software wallets

These involve applications that can be installed on the smartphone or any device.

-          Paper wallets

This is an offline method of storing private keys and may involve printing out a hardcopy of the key.

-          Hardware wallets

This is another offline option for safeguarding private keys. It uses an offline storage device like a hard drive, CD, or flash drive to protect sensitive data.

Each method for storing private keys have their own benefits and drawbacks, so make sure to choose the one most convenient to your situation.