• Saad Atique

What are Bitcoin public and private keys

Updated: Sep 14

After purchasing your first Bitcoin, you will come across various terms and phrases unknown to you before using cryptocurrency. Most people know the digital wallet, but many of us don’t know about “private keys” and “public keys”?


Both these are vital components of owning your Bitcoin. They give you control of your coins and money without any bank.


If you don’t know about private and public keys and how they are related to Bitcoin, let us take a look at the mechanism behind these keys.



Public Key Cryptography


The basis of cryptocurrency is embedded in public-key cryptography. This is a system that generates the keys known as the private key and public key. The system that generates these keys is the Bitcoin software.


First, the private keys are created and feature ECDSA (Elliptic Curve Digital Signature Algorithm). This unique and complex mathematical formula creates the key, which contains a string of numbers and letters. Private Bitcoin key looks like this:


E9873D79C6D87DC0FB4A5778633389F4453213303DA51F20BD67FC233AA33262


The private key also generates a digital signature that you can use to determine or verify the wallet’s identity (i.e., the user). Then through the private key, a public key is formed.


The public key is mathematically derived and used to generate a special wallet public address. Furthermore, you can create multiple addresses.


Moreover, both private keys and public keys should be unique to prevent conflict on the network and prevent disputes in Bitcoin’s ownership.


Besides, public keys are known as “public” because you will mostly find them in open source networks such as Bitcoin. So, anyone can use them if they have a wallet with keys.

Remember that the wallet stores the keys, not your Bitcoin.


This is because Bitcoin is a number or value kept on the blockchain network. The private key authorizes and grants access to Bitcoin through the wallet.


Why public and private keys are essential?


The private key is vital as you cannot create a public key without it. Private key acts as a security check and verifies that the person spending or performing Bitcoin transactions is the actual owner based on a digital signature.


After necessary verification, the Bitcoin gets unlocked, and you can spend it.


The public key is mainly used to form a Bitcoin address. The public address states your wallet where to transfer the Bitcoin.


Your Keys are your coins.


Using public-key cryptography is essential on public and open networks such as Bitcoin.


Without keys, you cannot secure the data, and there will be no protection on the network.

A private key safeguards your Bitcoin from various threats as well as from others and confirms your ownership. In simple words, these are just your home keys.


And if you don’t have your home keys, you cannot enter your house.


So, without a private key, you cannot access your Bitcoin. This is why you need to realize its importance, especially when holding your coins independently and away from a digital exchange.


Conclusion


Keep in mind that if your private key gets lost, you cannot replace it. There is only one unique private key, so you need to have some sort of backup.


Similarly, never share it with a third party or others as they can access your account and Bitcoins. If someone wants to send you more coins, provide them public addresses, not private keys. As long as your keys are with you, they are safe.


Do I have to manage my private key if I invest in Utopia Digital Asset Management's DeFi Infrastructure Fund?


No. The keys are managed by ICONOMI platform. This means that you can log into your account and you will be able to see the value of the collective cryptocurrencies that the fund has invested in for you.


We understand that this may seem contradictory to what we have said above, however, ICONOMI are a trusted crypto platform provider and are audited regularly by Deloitte to make sure they are treating your funds correctly.



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