What's the difference between a public key and private key?
Blockchain technology might seem super futuristic and hard to understand, and whilst that may be true to some extent, there are some basic concepts that are worth understanding to ensure you navigate this new and exciting space with ultra care.
Cryptocurrencies and wallets use a number of cryptography tools (duh) such as public keys and private keys. So what’s the difference? And more importantly, why do they matter?
What is a hardware wallet public key?
A public key, as it sounds, is a users public wallet address. Similar to how your BSB and account number are used in traditional banking to identify an account (or wallet), public keys are used to identify a users wallet, which then allows the transfer of Bitcoin or other alternative coins to it. A public key is something you share with your friends, family or whoever you wish to transact with so they can send you those crypto coins.
Public Keys are cryptocurrency wallet addresses.
Most, but not all, blockchains will allow you to identify users and their wallet holdings and transactions by using the public key. This won’t allow access to the funds, but just a birds eye snapshot of what has been going on within that wallet. Imagine sharing your bank statements to the world for all to see, except your real name is replaced by a public key which is usually a string of ‘random’ numbers and letters. This is what’s known as pseudo privacy.
Do you need to keep your cryptocurrency wallet address secure?
Whilst keeping your public key is certainly not as important as keeping your private key secure, you may not wish to share this to openly. As most Blockchains are public, anyone with access to your public key has the potential to fully audit your wallet, giving away you account balance, transaction history and other bits of metadata. This would lead to you becoming a target for would be attackers.
Public keys are able to be generated over and over again, meaning you could use a new public key every time you transact. The beauty of this technology is that each and every public key you create will always be linked back to the same private key - this is known as a deterministic hardware wallet. This means you could share a public key with a family member to send you some Bitcoin and then this same public key could be used 5 years down the track.
What is hardware wallet private key?
As the name suggests, A private key is something you want to keep private, just like your internet banking password or your credit card pin - It is what authorises and signs transactions out of your crypto wallet. The safe generation and storage of your private key is quite possibly the MOST important thing about owning cryptocurrencies, especially when the individual now becomes the sole responsibility in this new decentralised industry. If someone else has a copy or access to your private key, they also have the ability to move your funds, which is obviously not a good thing.
Private keys give you the power to send out of your hardware wallet.
Similar to the public key, the private key is a string of numbers and letters. This can obviously be problematic when it comes to memorising or even storing safely and securely. Thankfully there are smart engineers and entrepreneurs out there who have designed user friendly solutions to manage your private keys. The introduction of dedicated cold storage hardware wallets has reshaped the way people interact with the blockchain and introduced a cost effective and simple way to manage your private key.
Key points: Keep your hardware wallet private key safe.
We have learnt that public keys are also known as your cryptocurrency address, they are shared to others to receive cryptocurrency. Private keys are your digital key and give the individual who holds them the power to spend out of a cryptocurrency wallet.Your hardware wallet will create a recovery phrase (usually 12 or 24 words) which can be used to restore your cryptocurrency wallets in the unfortunate scenario where you’ve lost access. Having access to that recovery phrase is like having access to ones private keys, so keep them safe! Storing these words are extremely vital and you might want to consider a device like the Billfodl or the Cryptotag to take your security to the next level.