Public and Private Keys: A Crypto Investor’s Guide

Public and private keys are critical to blockchain technology as a way to encrypt, decrypt, and authenticate transactions on a blockchain network. As an investor, it is critical to understand how these keys work to protect your crypto tokens within your wallet.

Looking to learn more about the basics of Crypto? Check out our Crypto terms every investor should know.

Understanding Public-Key Cryptography

Public-Key Cryptography (PKC) is a validation technology to authenticate data used in computing. PKC utilizes asymmetric encryption to ensure that only users with the correct keys can access the data. Asymmetric encryption requires a public key for encryption and a private key for decryption.

Ready To Spend Your Bitcoin, Ethereum, Ripple, Litecoin, and Other Cryptocurrencies?
Within minutes you can register for a Unbanked account, add funds, pass KYC, get a virtual card and make purchases anywhere major credit cards are accepted. Register at no cost to you.
  Register Now

Cryptocurrency uses PKC to encrypt and decrypt transactions on a blockchain. PKC ensures the security of the transaction and authenticates the users between the transaction. To exchange cryptocurrency on a blockchain, users need public and private keys.

Why You Need Public and Private Keys

Blockchain technology relies on public keys and private keys for several critical functions:

  • Protecting a User’s Identity: Using keys, individuals can safeguard their identity and data while performing transactions on the network.
  • Ensures the Security of the Transaction: Cryptography validates that the transactions are secure, valuable, and viable.
  • Enables the Transaction to Turn into Secure Blocks: When a transaction turns into a block and is added to the blockchain, the block cannot be altered without consensus, providing the highest security from attack.

Related Link: Four Kinds of Blockchain Structures: Which is the Best for You?

What is a Crypto Private Key?

Your crypto wallet will have a private key assigned to your wallet to decrypt, send, receive, and access transactions. A private key can be a:

  • 256 character binary code
  • 64 digit hexadecimal code
  • QR code
  • Mnemonic phrase

Because private keys are very complicated, users are given a secret phrase when they activate their crypto wallet.

Why Do I Have a Secret Phrase?

The secret phrase is a failsafe for authenticating the user to verify the wallet is theirs. You should never share your secret phrase with anyone. You should only use it to verify access to your crypto wallet.

The secret phrase is 12-24 words that act as a long-tail password for accessing the crypto wallet. Your secret phrase should be written down, stored securely, and not be accessible from an Internet connection. Your crypto wallet will keep your private key secure. You will be locked out of the wallet if you lose or forget your secret phrase.

How Do I See My Private Keys?

Most crypto wallets don’t openly share your private key. You may be able to find it in your settings, but your wallet securely handles and manages your private key. Your secret phrase acts like your private key. 

So anyone with your secret phrase can spoof your wallet. That’s why you must never share your secret phrase with anyone or thing. Beware: hackers and scammers can create believable scenarios to trick you into sharing your secret phrase.

What is a Public Key in Cryptocurrency?

A public key enables users to receive cryptocurrency in their crypto wallet. Your crypto wallet’s private key generates the public key using a complicated mathematical algorithm known as elliptic curve multiplication or The Discrete Log Problem. This algorithm ensures hackers cannot reverse the public key to access the private key.

Because the public key is secure, users can share their public key openly to receive crypto tokens. The public key encrypts the transaction, allowing only the user holding the private key associated with that public key to access the transaction.

Want to buy and sell crypto with ease? Learn more about Unbanked’s cryptocurrency solutions. 

Related Link: Cryptocurrencies as a Solution for the Unbanked

Is a Public Key the Same as a Wallet Address?

No, they are not the same, but they are similar. Just like the public key is generated from your private key, the wallet address is generated from the public key using a one-way hashing algorithm. Your crypto wallet address is similar to a public key because it can be shared openly. But it’s not the actual public key but rather a 160-bit representation of the public key.

Public and Private Keys: A Crypto Investor’s Guide, New-Project-19-1024x519, Uncategorized , Unbanked, Unbanked Card, Crypto Card, Unbanked Debit Card, Crypto Debit Card, BlockCard

Can I Lose My Public and Private Crypto Keys?

Yes. That’s why your secret phrase is so important and should be treated like a legal document. If you have a hot (software) wallet, you’ll need your secret phrase to access the wallet. If you have a cold (hardware) wallet, the secret phrase is still critical, but you can also physically lose the wallet and the public key.

How Public and Private Keys Work Together

The private and public keys work in unison to create a digital signature for accessing data or transactions. The keys work in unison. When a user sends a transaction to another user, the recipient’s public key encrypts the transaction.

But the blockchain also requires the sender’s public key to verify that the transaction is from the sender. Using both the sender and receiver’s public keys for encryption creates a digital certificate or signature. When the receiver decrypts the transaction with their private key, it also authenticates the digital signature.

Related Link: How Can Blockchain Technology Revolutionize the Supply Chain

Do All Coins Have Public and Private Keys?

All cryptocurrency tokens utilize PKC but don’t necessarily have a public and private key pair associated with each coin. Instead, the treasury address that holds all the tokens has a public and private key to authenticate and validate each transaction when you buy or sell the token.

Public and Private Keys: A Crypto Investor’s Guide, New-Project-20-1-1024x519, Uncategorized , Unbanked, Unbanked Card, Crypto Card, Unbanked Debit Card, Crypto Debit Card, BlockCard

Public And Private Keys are Critical to Blockchain Security and Authentication

Users that buy and sell cryptocurrencies need public and private keys to encrypt and authenticate their transactions. PKC is central to blockchain security and verification. While public keys can be shared freely, users must guard their private keys and never share their secret phrases.

Unbanked strives to educate investors on blockchain technology and terminology to help them protect their cryptocurrency portfolio and invest wisely through crypto exchanges. The more you know about the technology and market, the better equipped you are to identify scams and phishing schemes.

Want to eliminate crypto deposit and transaction fees? Sign up for the Unbanked BlockCard VISA.

Buy Bitcoin With Your Unbanked Bank Account
Buy Bitcoin and other cryptocurrencies with your crypto friendly bank account from Unbanked. Purchase Bitcoin and other crypto instantly and settle to your crypto wallet.
  Register Now

Related Link: How to Diversify Your Crypto Portfolio: Best Strategies

The Latest

Unbanked launches cryptocurrency card program in the UK and other European countries

Unbanked Card Program Available in the UK and Other European Countries

Today we’re announcing some big news – The Unbanked Card program has reached Europe. Residents of the United Kingdom and other European countries can register their interest for a user account, deposit their cryptocurrency and, subject to approval, get a card for spending their digital assets. Unbanked card holders can use 15 different cryptocurrencies to… Read Article

What is Dash Crypto

What is Dash Crypto? Dash Coin Highlight

Bear markets are the best time to invest in stocks and cryptocurrencies. If you have money to invest, you can pick up top-tier cryptocurrencies for bargain prices during a bear market. A digital currency hot on many investors’ radar is Dash, a DeFi cryptocurrency with massive potential. We’ll highlight what Dash is, how it works, and whether it’s… Read Article

How to Value Cryptocurrency

How to Value Cryptocurrency to Know What to Buy

When investing in cryptocurrencies, investors need to vet the projects before they invest. Because the cryptocurrency market is largely unregulated, it is often compared to the Wild West, where you can strike gold and be robbed blind. In 2021, investors lost $2.6 billion in pump-and-dump coins or other junk tokens. To avoid scams, rug pulls, and weaker projects,… Read Article

Why is Cryptocurrency Valuable

Why is Cryptocurrency Valuable? A New Investor Guide

It’s hard to look at any financial website and not see some mention of cryptocurrency. However, with all the hype around cryptocurrency, it’s tough to filter through what’s true and what’s not. One common question is, what are the factors that make cryptocurrency valuable? We put together this investment guide for new investors to explain… Read Article


6.38%

Crypto Rewards
on Spend

You also have access to:

BANK ACCOUNTS
DEBIT CARDS
BUYING, SELLING, & SPENDING CRYPTO


ARE YOU READY TO GET UNBANKED?


Nah, I enjoy high fees...

x