Public and private keys are crucial in the cryptocurrency ecosystem, providing security within the blockchain network. Generated through cryptography, they’re foundational to the public-key cryptography (PKC) system.🔗 These keys are essential for sending and receiving cryptocurrencies, eliminating the need for middlemen in transaction verification. 🚫👥
Public Keys 🔓:
Allow users to send or receive a specific crypto asset.
Safe to share: others can only use them to send you funds, not to access your wallet.
Typically, public keys are derived from private keys and can be turned into public addresses for ease.
Private Keys 🔐:
Alphanumeric codes authorizing transactions and confirming crypto asset ownership.
Should NEVER be shared: if accessed, someone can steal your funds.
Centralized exchanges often hold users’ private keys, but with risks. For example, FTX’s collapse raised concerns about centralized exchanges’ safety.
Non-custodial wallets let users control their keys, usually in the form of seed phrases. They can take various forms: binary codes, hexadecimal codes, QR codes, or Mnemonic phrases.
Transaction Process 🔄:
Transaction details are created, including sender’s and receiver’s addresses.
Private keys are used to digitally sign and validate the transaction.
The transaction is then sent to the network for verification by nodes.
Protection Tips 🛡:
Don’t share private keys.
Always backup with a recovery phrase, especially for non-custodial wallets, giving users full control.
Vulnerabilities with private keys can result in significant losses, like the $6 billion loss with FTX.
Conclusion 🎯: Public and private keys are vital for crypto transactions. While sharing public keys is safe, private keys must be securely guarded to protect assets. Always handle with care! ⚠🔒🪙.
To dive deeper, check out the complete article: https://droomdroom.com/public-and-private-keys-differences/
