Bitcoin Private Keys: Everything You Need To Know
Updated: Aug 30, 2018
What if you lost all of your bitcoins tomorrow? What would you do?
Let me stress this point:
“If you don’t own your private key, you don’t own your bitcoins.”
Yes, you read that right.
Even the most knowledgeable man on Bitcoin says:
"The private key must remain secret at all times because revealing it to third parties is equivalent to giving them control over the bitcoins secured by that key. The private key must also be backed up and protected from accidental loss, because if it’s lost it cannot be recovered and the funds secured by it are forever lost, too." - Andreas M. Antonopoulos, Mastering Bitcoin: Unlocking Digital Cryptocurrencies
In my earlier guide on Bitcoin wallets, I have used two terms extensively- Private Address (or key) and Public Address (or key). These keys are what make Bitcoin the safest and most widely used cryptocurrency.
To understand private keys and public keys, let us look at an example.
Consider a mailbox where you receive your physical mail.
It has a unique and specific number (an address). If someone has to deliver you a letter, he/she must know your house/flat number to deliver it.
And as the receiver, you have a private address (or key) to unlock the mailbox and collect your belongings.
In real life, do you give your keys to someone unknown?
No. Of course not.
You always keep track of your key and don’t jeopardize the contents inside of your mailbox.
Similarly, just like your house/flat number, anyone in the Bitcoin world can know your public address (Bitcoin address) to send you bitcoins. And to unlock (spend/send) those bitcoins, you would require your private address (or key) for which you need to take full responsibility, just like the keys of the mailbox.
I feel that understanding the underlying technical aspect of keys is important so that your remain better informed and educated enough to take care of them.
In the next section, I will tell some basic technical aspects of these keys.
What is a Private Address (or key)?
A private key is a secret, alphanumeric password/number used to spend/send your bitcoins to another Bitcoin address. It is a 256-bit long number which is picked randomly as soon as you make a wallet.
The degree of randomness and uniqueness is well defined by cryptographic functions for security purposes.
This is how the Bitcoin private key looks (it always starts with 5):
What is a Public Address (or key)?
This is another alphanumeric address/number which is derived from private keys only by using cryptographic math functions.
It is impossible to reverse engineer and reach the private key from which it was generated.
This is the address used to publicly receive bitcoins.
This how the Bitcoin public address looks (it always starts with 1):
This address is always seen and broadcasted for receiving bitcoins. Users can make as many public addresses as they want to receive bitcoins.
What are Bitcoin private keys used for?
Private keys are used for making irreversible transactions. Yes, irreversible!
They are the key to spending and sending your bitcoins to anyone and anywhere. This irreversibility is guaranteed by mathematical signatures which are linked to each transaction whenever we use the private keys to send bitcoins.
And for each transaction, these signatures are unique, even though they are generated from the same private keys. This feature makes them impossible to copy. The user can confidently use the same private key again and again.
Moreover, the signatures are mathematically related to Bitcoin addresses. This math relation helps in confirming that the signatures are only of that particular account holder who wants to transfer bitcoins.
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All blog posts are for informational purposes only.