Bitcoin uses cryptographic methods for providing performance and protection of the system. At the same time all the information about transactions within the system is available in the open source. Cryptography creates a set of keys to control the access to Bitcoin on the blockchain. It consists of two keys, public and private. If you own both keys then you control your Bitcoins. You private key is like a PIN of your bank card. To keep your funds safe, be sure you have your private key under control.
The role of Bitcoin keys
The cryptographic key was invented in 1970. Today it is a mathematic basis for computer safety. In addition, we see the result of implementation of digital passwords and signatures. To create private and public keys, the Bitcoin protocol uses ECDSA (Elliptic Curve Digital Signature Algorithm). These two keys control the access to Bitcoins on your wallet. In order to generate the keys, cryptographic base is used.
The public key is used for receiving Bitcoins, and you use your private key to sign up transactions when you spend your digital funds. In other words, it is a secret number that allows the owner to spend his Bitcoins. Private keys can be kept on computer files or written on paper.
Bitcoin keys and address
Two more elements connected to Bitcoin keys are to be used to receive and send Bitcoins. One of them is Bitcoin address. A bitcoin address is a string of numbers and letters generated from public and private keys. They can be defined as the fingerprint of those keys. Bitcoin address has a more manageable format. These versions of the public and private keys are called private and public addresses. The private address is the one that provides access to bitcoins. It must be kept secret. The public address is a kind of wallet number.
Digital signature
Another essential element in Bitcoin transaction is a digital Bitcoin signature. If you want to spend Bitcoins, it’s necessary to confirm the property right for these coins. Digital signatures are included in the scriptSign field of the transaction. Signatures are cryptographic elements calculated from a private key and a combination of other information included in a transaction.
Here you can see a kind of “magic” of cryptography. It allows the public key to be used to verify that the specified signature was generated using the corresponding private key. In addition, it demonstrates knowledge of the secret key the owner provides for the very transaction. Therefore, each signature is only valid for a specific transaction.
The safest ways to store Bitcoin keys
Crypto owners are afraid to lose their cryptocurrency as a result of theft, loss of access keys or computer failure. That’s why there are a number of options to use wallets: paper, hardware, mobile, desktop and multi-signature.
- Paper wallet. Quite a safe way to keep your Bitcoins. Paper wallets are a simple way to save your anonymity. Write down your Bitcoin key on a piece of paper and keep it in a safe place.
- Hardware wallet. Such wallets are bits of hardware like USB devices. Your identifying data can’t leak. It is one of the safest methods for holding your digital assets, as these wallets are not connected to the Internet.
- Desktop wallet. These wallets are not connected to the Internet either. That’s why they are more safe. Desktop wallets are accessed only via your private computer, with personal security keys stored just on the device.
- Online wallets. You can find a great range of platforms that provide such a service. All of them guarantee security. Many of them claim that it is not traditional currency, that’s why users have to use methods up to date. However, it’s up to you to decide.