WHAT ARE PRIVATE AND PUBLIC KEYS AND WHAT DO THEY DO?

main.dictionary | Sep 25, 2018 | Dictionary |

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Bitcoin and other coins that emerged later (Ethereum, Bitcoin Cash, etc.) are based on a cryptographic system using key pairs: Public keys. Their name speaks for itself and everybody knows what they...

Bitcoin and other coins that emerged later (Ethereum, Bitcoin Cash, etc.) are based on a cryptographic system using key pairs:

Public keys. Their name speaks for itself and everybody knows what they are.
Private keys. They are kept a strict secret. If somebody gets hold of another person’s private key, he can steal such user’s money.

The keys represent large integers, but are usually converted for convenience into the WIF format, whereupon they look like small sequences of numbers and letters.

A network also uses an address system which will be discussed later.

What do you need the keys for?

Private keys are generated and stored automatically by your crypto wallet. They are required for authentication and encryption. A private key is also used to generate a public key, which process is based on a certain algorithm. The address used in transactions represents a simplified version of the public key.

A private key is what gives a cryptocurrency owner the right to access the funds at the specified address. When you enter your blockchain wallet and send bitcoins to somebody, the software signs the transaction using your private key without disclosing it (as you remember, private keys need to be kept secret). The signature shows the entire network that you do have the authority to perform the transaction.

Security

An attentive reader may suspect that something is amiss here: «If a private key should not be disclosed to anyone,» he would think, «but the public key is known to everyone and it is generated from the private key, can’t a reverse operation be done to calculate somebody’s secret key?» And he will be absolutely right.

If fact, at early stages of blockchain development, its creators faced that problem, but luckily it was solved right away. All thanks to highly complicated generation mechanisms: the processes are designed so that it is quite easy to generate a public key from a private one, but a reverse operation would take an enormous amount of time — 40000000000000000000000000000000 years! Just imagine, it’s a figure with 31 zeros! This hopefully dispels your suspicions about the system’s vulnerability.

Thus, thanks to the ingenious interaction of public and secret keys, we can quickly and safely exchange cryptocurrencies in the course of trading and for other purposes.