Bitcoin course for beginners 2 - 03/11
Public Key - Private key pair.
We now know that a crypto wallet is a program that uses cryptography to encrypt transactions.
The backbone of this encryption system is the Private Key Public key pair (or asymmetric cryptography).
I always describe the public key as your IBAN or bank account number (which may be known to others) and the Private key (which may be known only by yourself) as a password to access your bank account (The private key [PrivKey] is a number, usually picked at random).
These keys are generated inside the wallet by cryptographic algorithms. Both keys are therefore mathematically linked, and they are also called one-way function. It means that once the wallet encrypts a transaction, it is extremely difficult to reverse-engineer it without the private key. Therefore, you must key your private key private.
Remember, it gives you the ability to prove ownership of your coins (ownership associated with your public key).
On the other hand, the public key is given to anyone willing to send you money. The logic behind the creation of those keys is the following: first, the private key is generated. Then, this PrivKey is turned into a public key, and finally, a bitcoin address is generated from the public key. A bitcoin address is a string of numbers and letters that can be shared with anyone willing to send you crypto currencies. The other name for it, is the “recipient” of funds. Remember, a bitcoin address represents and is derived from a public key.
Both, private and public keys control your cryptocurrencies. Owning your crypto means that you own your private key. “Not your keys, not your coins”.
Remember that holding your own private key is the best as you don’t give a third party the access to it. But it comes with responsibility. If you lose it, you will never be able to access your coins. If you chose a custodial solution (You don’t own the private key) make sure it is a trusted exchange with excellent security set up.
Lesson 1 – What is a cryptocurrency wallet?
Lesson 2 – What is cryptography?
Lesson 3 - Public Key - Private key pair
Lesson 5 - What is a distributed ledger?
Lesson 6 – How transactions work?
Lesson 8 – What is bitcoin mining?
Lesson 9 – What is proof-of-Work?
Lesson 10 – What is a consensus mechanism for cryptocurrencies?
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