Whenever you open your social media account, you are required to put on a password that only you know. This gives you a first-line defense against unofficial and unapproved access to your personal information.
Private keys work the same way. For every cryptocurrency asset owner, it is necessary to have a private key for the security of their holdings.
A private key can be considered as the password that unlatches the virtual digital currency vault that holds the money. As long the owner keeps his/her private key a secret, the crypto holdings will be kept safe and accessible anywhere so long as there is an internet connection.
Before we clock into the depth of private keys, let’s dive in first on the type of keys you will acquire when you buy cryptocurrencies.
Public Key and Private Key
You are given two keys when you first purchase a cryptocurrency, a public and private key.
A public key is somehow comparable to an email address, which you can confidently share with other people to receive or send funds. It’s called a “public key” is because it can be openly distributed to the public.
On the other hand, a private key is not sharable to anyone, even to your relatives. Private keys must be safeguarded rigorously, or else there will be a big chance of getting your assets stolen.
The public address allows sending and receipt of funds, but the private key is necessary for the withdrawal. Without it, the money will only be housed in the digital wallet.
Private Key and How Does It Work?
Technically, private keys are cryptography that lets people access their owned cryptocurrencies.
Private keys are vital in altcoins and bitcoin. The security it provides protects users from unauthorized access and theft to funds. A private key is made up of alphanumeric characters, making it pretty difficult to crack.
If you have never seen a private key even once, imagine a very long string of randomly jumbled numbers and letters.
This private cryptocurrency key is actually related to the public address, only that private keys have advanced cryptography. Every private and public key pair are quirky.
While the public key is generated from the private key by a complex mathematical algorithm, reversing the process is just a far-fetched out-of-the-question idea. One cannot create a private key through a public key. Even the world’s most advanced supercomputers wouldn’t be able to, not in a thousand years.
No one can decrypt data aside from the authorized device where the private key is actually stored.
Cryptocurrency’s private is the heart of Bitcoin, and other cryptocurrencies that followed. If your money is stored in a bank, you can always ask help from a bank for a new pin code if you forgot yours. On the contrary, losing your private key means losing your funds forever.
Try to visualize public addresses as a mailbox, and private keys as the key to it. The carrier will be able to send small packages and letters through the opening of the mailbox, however, the only person who can retrieve the things inside the mailbox is the one who owns the key.
If the key to the mailbox will be stolen, then the things inside the mailbox could be compromised. If the key got lost, no one will be able to access what’s inside forever. This is the simplest way to put how public and private keys work.
Keeping Your Private Key Secured
There’s no need for you to actually memorize your private key. You can use wallets to do it for you.
Cryptocurrency wallets can either be an application (software wallet) or a small device (hardware wallet). The wallet is responsible for storing the private key of a user.
Owning a virtual wallet is the simplest way to manage your private key.
Let’s say there’s an initiated transaction, a software wallet will create a digital signature through processing the transaction using a private key.
This type of wallet is also called a “hot wallet” because the private key of the owner is kept on the internet. This is why selling, buying, and making use of your digital money is as easy and convenient as using credit cards online.
The drawback of this is that they are vulnerable to online attacks, and robust security measures are essential to ward it off.
If you’re up for a software wallet, make sure to choose a company that has proven itself in the industry, has a long track record for security, and has security features like two-factor authentication.
There are also trusted hardware wallets in the market.
The currently safest way to secure a private is by using offline or hardware wallets, which come in a form of a USB device or smartcards. You only need to insert the hardware wallet into your personal computer to access your funds.
Small hardware wallet devices store private keys offline to protect your funds from getting hacked. However, because online criminal activities are restricted, scammers have devised a different way to achieve their purpose.
Thefts cannot work their finger to the bones online, and so they resorted to sending tampered hardware wallets to ledger users.
Aside from sending tampered hardware wallets, scammers won’t be able to do any harm to your crypto assets if you will not fall for their trap. Hence, make sure to always be updated on how the crook-minded people would try to approach you, so you will know how to counter them.
Hardware wallets are also referred to as “cold storage” because it safeguards the private key from digital theft.
Aside from using wallets, you can also write them down on a piece of paper.
Saving your private key to your online documents or notes is quite risky because of a possible online onslaught, memorizing it may bring you trouble if you forget even just one character, and so writing it down in a paper and keeping it in a safe could be a good choice.
Unlike fiat currencies that are managed and guarded by central authorities, cryptocurrencies are self-managed. You have no perks of having someone to protect your funds, except you.
In a nutshell, private keys are impossible to crack and there will be no way for criminals to get it from you if you ensure that it is kept out of reach from cybercriminals in a resilient and secure way. Make sure to make the right choice in choosing how you will safeguard it.
As ghastly as it seems, you should also establish an emergency plan so your family would be able to access your tokens and coins if something bad happens.
