In cryptocurrency, a public key and private key are cryptographic keys used in asymmetric encryption systems, such as the ones employed by cryptocurrencies like Bitcoin and Ethereum.
These keys are essential for secure transactions and ownership verification.
A private key is a randomly generated, secret piece of information that is kept confidential by the user. It is used to create a digital signature, which is a unique cryptographic proof of ownership and authenticity.
The private key should be kept secure and not shared with anyone, as it grants access to the funds associated with the corresponding public key.
A public key, on the other hand, is derived from the private key using mathematical algorithms. It is meant to be shared openly with others.
The public key is used to verify the digital signature created by the private key and to encrypt messages or transactions intended for the owner of the private key.
When someone wants to send funds to a cryptocurrency user, they need the recipient's public key. The sender uses the public key to encrypt the transaction or message, ensuring that only the private key holder can decrypt and access the contents.
Similarly, when the owner of the private key wants to authorise a transaction, they use their private key to create a digital signature, which can be verified using the associated public key.
The combination of public and private key cryptography enables secure and reliable transactions in cryptocurrencies, providing a mechanism for ownership verification and protecting the integrity of the blockchain network.