October 2, 2020

Bitcoin Private Keys: Everything You Need To Know

Bitcoin Private Keys: Everything You Need To Know

What if you lose all your Bitcoins? This is a very unpleasant situation. Imagine that this really happened. How is it possible?

The easiest way to lose your digital money is to forget your private key. That’s why you should know all about it.

Also, you should not tell this key to other people because this is equivalent to giving your wallet with fiat money or a password to your bank card. Let’s describe in detail what a private key is.

What is the private key?

There are two terms that characterize digital currencies. These are public and private keys. This dividing is important to make operations with cryptocurrencies safer.

Let’s consider a simple example. Imagine the mail (physical, not electronic). What components does it have? The physical address where letters come. Also, you have a key with which you can open your mailbox and read your letters. Do you give your key to everyone? Naturally, no. You give it only to those people whom you can trust.

The mailbox address is a public key that you can give everyone. Only you are responsible for saving your key.

This is very important to understand the technical aspect because your money depends on it.

Therefore, a private key is a unique long number that is generated by cryptographic algorithms and which can be used for transferring cryptocurrency to other people and spending money the owner has. This algorithm decides what level of protection will be.

This number always starts with 5 and looks something like 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF.

Definition of a public key

A public key is a number generated by a cryptographic algorithm that is used for payments and transferring money between two or more users. It is made on the base of a private key but you can’t get a private key if you know just the public key.

The public key always starts with 1. This is an example of a public key. 1EHNa6Q4Jz2uvNExL497mE43ikXhwF6kZm

Other people can see all operations made with a certain public key. All users can generate as many public keys based on their private key as they want.

How do you use private keys?

Private keys are made for carrying out irreversible operations that are guaranteed by mathematical signatures. They are connected with every order and guarantee real irreversibility no matter where these operations are executed.

The private key is important to be able to send the cryptocurrency.

Also, all signatures are unique. That’s one more reason why transactions with Bitcoin are so reliable.

If someone tries to copy the transaction, the second operation with the same signature is blocked by the system. That’s why you can use your private key for sending money to other people. All signatures are mathematically related to a certain private key and because of this, it’s easy to identify the owner of the private keys (not the personal name and other info, so you don’t have to worry about it).

Bitcoin Private Keys: Everything You Need To Know

How does Blockchain keep the keys in secret

All technical information described above can be hard to understand. All you need to understand is that you can use your private key for an unlimited time. Another thing that you should remember: don’t give your private key to other people. They can steal your money immediately.

One of the biggest advantages that Bitcoin has in comparison to fiat money is the fact that coins can be stored on the user’s computer and not on the network. Network, in this case, would save only the description of transactions between users. You would need to download the special software or file which will be your wallet with keys. You can choose any existing service for this. There are many wallets created for PC, mobile phones or web. The last type is the most universal. You can consider what you need and choose any you want.

Types of wallets

Let’s describe the types of wallets that keep the private keys. Some of them are more protected while others not so much.

Web and mobile

If you are an Android or iOS user, you can use special applications for keeping your keys. These are the most unsafe types of cryptocurrency wallets. If you want to use this type, you need to take extra measures to protect your cryptocurrency. For example, keep some money on the computer and some on a mobile phone.

The most popular Android wallets are:

  1. Coinomu.
  2. SamouraiWallet
  3. Guarda
  4. Atomic Wallet

The most popular iOS wallets are:

  1. Breadwallet
  2. CoPay
  3. Edge
  4. Jaxx
  5. Bitpie
  6. Blockchain

Desktop wallets

You can be sure in the safety of these wallets the wallets. If you install those applications on your computer, you will get your keys as a file. You can download it or share it if you want (but remember about the safety).

Your keys are stored on the hard drive or other physical devices. That’s why you need to have it on several devices because if you lose one of them (or the hard drive gets damaged), you wouldn’t be able to restore the key and your money would go away forever.

The list of the most popular Bitcoin wallets is illustrated below.

Bitcoin Private Keys: Everything You Need To Know

Hardware Wallets

This type of Bitcoin wallet is totally offline and protected from other people. This is the safest type of wallet that keeps keys physically. Some of them are made very similar to the standard credit card and even with the digital screen that allows users to verify their transactions.

Hardware wallets are the most protected from hackers but have a limited interface. One more advantage of this type of Bitcoin wallet is the possibility to restore the key if they are lost.

There are a lot of attractive hardware wallets: Let’s describe some of them.

Trezor

This is the oldest hardware wallet. It was created after the creation of Bitcoin. You can use it via USB cable. Also, it has a digital screen that helps to set up your wallet. This is a great option for people who want a reliable device to store their Bitcoins.

Ledger Nano S

This is another cryptocurrency wallet that looks like a flash drive. This cryptocurrency wallet is protected from malware. Developers created two buttons that are used to confirm the transactions. You need to press them together if you want to carry out the payment. That’s why hackers can’t use your money. They don’t have physical access to these buttons.

Before you use this cryptocurrency wallet, you need to set up a PIN code.

Paper wallets

This is the most interesting and simplest type of wallet. You can copy your keys from the special websites, write down in a file, and print it. This type of wallet is effective to store both private and public keys but they are mostly used as the last option. This is one more way to keep your keys offline.

There are some advantages that this type has:

  1. You don’t have to keep it on your computer. This is a guarantee that your keys will definitely be saved in any situation.
  2. You can print any number of pieces of paper you want. This is significantly better than buying two devices and can save you a lot of money.

Despite this, remember that this type of wallet can be damaged. Due to this, you need to print new pieces of paper if you need it.

How many Bitcoin private keys are there?

The number of Bitcoin keys is huge. Every day about 300 thousand transactions are carried. We can’t say certainly how many addresses there are in the Bitcoin network because this number increases every minute. There are about 30 million keys at the moment when this article was written. The number of public keys is greater.