A Bitcoin Private Key is the most important thing in Cryptocurrency. It helps keep your coins safe and gives you the privy of accessing your Bitcoins by yourself. You need your private key to receive the Bitcoins, also to have access to your funds. It is a secret, alphanumeric, password used to spend, or send your bitcoins to another BTC address. A Private Key is a 256-bit number that is provided to you as soon as you create a wallet. A Bitcoin private key is created in a random manner along with your cryptocurrency wallet. The possibility of creating two identical keys is zero. This is how the Bitcoin private key looks like:
Bitcoin private keys are used to make irreversible transactions. For every transaction a signature is required which is linked to the private key. The signatures are unique every time, which makes it impossible to copy. Moreover, the signatures are mathematically related to the address which helps in confirming that the signature is of that particular account (It’s like a cross-check mechanism).
For sending bitcoin to anyone, you will require the public address of the beneficiary, and to unlock those Bitcoins you need the private key.
What is a public address?
A public address is like an account number. When two people need to send bitcoins to each other, they need this address. It is also an alphanumeric number which is a sort out number of the private key. The private key is very long so it is compressed to make a public address. Even though the address is a compressed version of the private key, it is impossible to reverse it to make the key. The cryptocurrency network is secured by using mathematical functions so that no one can find the key. If a user loses his private key, any bitcoin or altcoin located at his public address will be inaccessible forever. This is how the Bitcoin public address looks like:
Since these keys are very important and crucial for ownership of bitcoins, they are not on the Bitcoin network but are stored in a file/software also known as wallets.
Mobile, Dekstop, And Hardware Wallets Used For Storing Bitcoin Private Coins:
There are software’s that save your private key on your behalf in their server. They apply various safety measures like encryption, firewalls, 2FA, etc. No one is responsible for your private key, if the server is hacked then you are doomed. Some examples of mobile wallets are Trust wallet, Muun Wallet, Guarda, etc.
Desktop wallets are better than mobile wallets. Once you download them on your desktop you can import and download your file in it. You can put a strong password on it and store it on the hard drive.
But one needs to be careful with these wallets because if you lose the private key file, you will lose the bitcoins, forever. Some examples of desktop wallets are Exodus, Armory, Electrum, etc.
These are the safest ones because you can save the key offline away from the vulnerable online environment. They are USB-like devices used to store private keys and other BTC information.
They are impossible to hack and if you lose them or they get destroyed you can retrieve the key by the backup phrase. Some of them even have a digital screen to easily transact.
Some of the popular hardware wallets are:
These are USB-like devices that store the private key offline and help to sign transactions. It has a digital screen too which makes them convenient to use.
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These have two buttons that are to be pressed together in order to complete the transaction. It can access software wallets like Guarda and can even work on the computer with malware. It is a highly protected device that has a PIN of its own in order to unlock its functions.
Paper Wallets are also an efficient way to save the Private key. In this, you simply print the key and other credentials on a piece of paper and keep them in a safe. It protects the key from hardware malfunction and mishaps with desktop or mobile phones.
These are also called “cold storage” because they are generated offline and never stored online or on a computer.
Bitcoin private key is the cornerstone of the network functioning. Without it, you cannot transact and if you lose it then you lose your bitcoins for good, a crypto trader should understand how confidential and important Private Keys are for transacting with Bitcoins.