Top Secret.. How do cryptocurrency wallet keys work?


 

There are intuitive questions that anyone would ask to him/herself when first hearing about the bitcoin currency Such: what does bitcoin look like? What texture does it exactly have? Is it similar to the dollar texture, riyal or dirham! we know those currencies, we can hold and keep them in a wallet. 


Top Secret.. How do cryptocurrency wallet keys work?


But what does bitcoin look like?


It is a digital currency that cannot be printed in a traditional currency press, nor can it be touched or placed in a bank vault or in our wallet as we usually do with common currencies.


Therefore, they are called virtual currencies, and technically Bitcoin It is a series of a binary number system used by computers and consists of two symbols: "0" (zero) and "1" (one). In order to keep a balance of bitcoins or any other currencies, there must be a wallet.


This wallet will have a private key, a public key and an address. They are random long codes of numbers and letters linked through an encryption algorithm that was used to program Bitcoin at the time of its release.


So, what is the public Key, the private key and the wallet address?


As for the private key, it is a secret encryption code and only you know it. Through it you can control the digital currency / bitcoin balances that you have in your wallet.

Top Secret.. How do cryptocurrency wallet keys work?

Exactly like the PIN code on your bank card that you use anywhere. If someone knows your private key, they can easily withdraw all your bitcoin balance. It looks like that one shown on the screen. This is an example of a private key that is supposed to be very secret, and if you forget or lose it, you will lose your bitcoins or digital currencies, You will not be able to make any transaction, whether selling or sending bitcoins to anyone; with this private key you can make a digital signature on the transaction in order to complete it.


Top Secret.. How do cryptocurrency wallet keys work?


Considering the public key, it looks like that one shown on the screen, it is long and more complicated to issue. So, what happens now!


Top Secret.. How do cryptocurrency wallet keys work?


An address gets derived from it. In short, it is minimized to a smaller address. Thereby, we now have the address that we have derived from the Public Key. It is like the one shown on the screen. The address thereby is the heading by which other people can send you bitcoins or any other digital currencies Consider it exactly like your bank account number (IBAN).


For someone to transfer money to your bank account, they need an account number. You can give it to all people no worries. Here as well, your address is the destination whereby anyone can send you encrypted currencies, and it will be visible to everyone in the blockchain. Thus, if you decide to get into the world of digital currencies, you must create a wallet through which the private key and the public key are created and the address is derived.


The two (private and public keys) are mathematically related to each other. The public key is mathematically derived from the private key. However, it is impossible to figure out a private key out of a public key due to the one way hash function.


How to make private and public keys and addresses?


As aforementioned, there must be a wallet in order to be able to send and receive cryptocurrencies. In order to make the wallet, One must first create the private and public key and the address.


This can be done through decentralized platforms such as blockchain.com or myetherwallet.com.


First we make the private key. Through it the public key is made, yet, if one loses or forgets the private key, then all their encrypted currencies are considered lost forever, as said.


So, what happens if you lose your public key? 


No problem, you can retrieve it again via the private key. A simple example: I have 5 bitcoins with me, I want to send 2 bitcoins to a friend, I will ask him/her to send their public key so I can send them the 2 bitcoins.


When he/she sends me the public key, which is considered his/her address that people can transfer to , I would log into my wallet and send the 2 bitcoins. I must sign this transaction with my private key, which proves that I am the owner of those two bitcoins.


Has it been sent now? Well.. who makes sure that the transaction is right? And I, for example, do not slander this friend?


I may have copied the code for these currencies and sold it to more than one person, who makes sure that things are going well? For example, if I have 10 dollars, as soon as I give them to someone or pay them for any purpose.


They are gone out of my hand because there is no other copy of them. But the situation in cryptocurrencies is different, because they are codes that can be copied easily like emails, for example, as if you exactly send a copied email with the exact same text to many people.


So who can verify the authenticity of the Bitcoin transferred to anyone?


Those who assert that they are miners (those who mine bitcoin), go through a complex process through their machine in order to verify the transaction that took place between me and my friend, along with some other transactions.


When the verify the transaction it gets recorded in a block, then included in the blockchain. It is clear inside the block that the public key which code is (in this scenario it is my public key) sent 2 bitcoins for the second public key which is (my friend's public key).


Just as illustrated in front of you; What appears in the blockchain is Public keys only without names or any other details. After adding this block to the blockchain, I cannot either cancel or withdraw the 2 bitcoins back.


Their digital ownership of them went to the other party (which is my friend). Only, he/she can exchange them through their private key. They are now free to sell them or to pay them in exchange for anything or even send them to anyone else on their address.


This was a brief review covering the most important digital currency "Bitcoin"; in addition to public and private keys of digital currencies in general.


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