15 June 2020
If you are looking to use Cryptocurrencies, you will first need to secure yourself a Cryptocurrency wallet. A crypto wallet enables you to receive, store, and send digital currencies. Unfortunately, the science behind a crypto wallet can sometimes be a little hard to understand.
This article will explain what a crypto wallet is, and break down the difference between public keys, private keys, and wallet addresses.
The CRYPTO WALLET
A crypto wallet works just like your regular physical wallet where you can store your money and recover any amount whenever you wish to spend. The process is also very similar to the banking process, where you need to create an account, then store, send or receive funds through your bank.
While some wallets can only hold a single cryptocurrency, e.g. Bitcoin, others can store more than one Crypto coin, e.g. Bitcoin and Ethereum. Suffice it to say, there is a variety of Crypto wallet types to choose from.
Although there are many different types of Cryptocurrency wallets, each wallet works in a very similar way. A Crypto wallet allows the user to store Cryptocurrency in a specific address. This address acts like a specific bank account number that identifies who you are, and also ties to it all of your transactions.
There are different address formats for each particular coin or wallet, with the most common types containing a string of 26 to 35 alphanumeric characters. This implies that to receive Bitcoin, you will need a Bitcoin address. Similarly, to receive Ethereum, you would need an Ethereum address.
A Crypto wallet also comes with a collection of keys: private and public keys. A user’s first transaction generates a pair of these keys, which are unique identifiers.
A private key is a secret code that is associated with a given wallet address. The code is given to the wallet owner and acts like a password that gives you access to your wallet, which is a process known as “encryption.” A private key is meant to prove that the user is the owner of the wallet address in question.
The control and ownership of the private key is the basis for user control over all Cryptocurrency funds contained within a corresponding wallet address. A private key is used to generate signatures that are necessary to make transactions as they are used to prove ownership of funds used in the transaction.
The private key should, therefore, be kept private since revealing it to others may make your wallet susceptible to theft and unauthorized access. The private key is also protected and backed up to prevent accidental loss since failure to recover it will hinder you from accessing your secured funds. Too many wrong attempts and you could be locked out forever.
A public key is a cryptographic code that enables crypto users to receive crypto funds to an address (which is the account). Before any crypto transaction is approved, it must be digitally signed using the private key.
The public key is fashioned from the private key and is used to prove that the digital signature came from a user’s private key. The public key is used to generate a public address. Users who agree to transact with each other first share their public addresses, which act the same way as the bank account. In other words, to receive funds from other users, you must have a public address.
To engage in a Crypto transaction, you must have a Crypto wallet that acts as a digital banking system. The wallet is comprised of a private key, a public address/key, and a wallet address.
A wallet address acts like a specific bank account number that identifies who you are. A private key acts like a secret code or password that gives you access to your wallet. A public key, on the other hand, enables you to receive crypto funds into your wallet.
We hope this article was helpful, and as always, feel free to share your thoughts in the comment section below.