Private and public key

Private

The basic element that allows you to work with cryptocurrency is a wallet. This is not a physical medium (usually, but exceptions are possible, such as hardware cold wallets), but a combination of letters and numbers, knowing which, anyone can make cryptocurrency transfers to a person who owns this wallet.

Generally, these addresses are freely available and can be viewed and saved by anyone, if the system is not focused on ensuring the confidentiality of this information. For example, in the Bitcoin network you can find an address, and if necessary - also compare it with a specific person, but in the Monero network - no.

However, comparing the address and the identity is extremely difficult, since no confidential information is required to create wallets. And only if the owner of the wallet publishes it publicly, as Vitalik Buterin did for his wallet with ethereum and Satoshi Nakamoto with his bitcoin wallet, you can confidently carry out the correspondence. However, sometimes monitoring known addresses and tracking transparent cryptocurrency transfers allows you to identify their owners with a high degree of probability.

But knowing the wallet address does not provide access to it. Since it is responsible for such a process as asymmetric encryption. And its main tools are private and public keys.

Private key

In the context of the blockchain, this is a combination of characters that allows you to sign transactions and generate open receive addresses. Most often, this is a very long combination, which is extremely difficult to pick up with traditional hacking methods. For example, within the Bitcoin network, a private key might look like this:

L2hjTJNhjpUTdAVMArh3UqmnTXEVx6J6faui8cuxcppyqmuekj54

Public ones are generated that can be made public are generated on the basis of this key that. Because encryption is asymmetric, knowledge of the open key does not help to determine the closed one. But automation allows us to confirm their relationship.

In addition, knowledge of the private key allows you to put digital signatures on messages, guaranteeing that it was you who sent them. Again, knowledge of the public keys makes it possible to confirm the authenticity of such a signature.

However, many modern blockchains have begun to slowly move away from the practice of using meaningless combinations in favour of the so-called "seed phrases" - "mnemonic phrases". The essence is the same, but remembering, reproducing and saving is much easier.

Public key

The second important element of public key cryptography (PKC). It is generated on the basis of a private one and is used to encrypt messages. In fact, when another person uses a public key to carry out a transaction, only someone who has a private code can use it.

RSA is yhe most common and successful such algorithm, created in 1977 by developers Rivest, Shamir and Adleman. As it turned out, this is a reliable alternative to symmetric encryption, in which there was a direct pattern between the generated codes. However, even they could be exchanged securely, especially if special protocols, such as the Diffie-Hellman-Merkle key exchange protocol, were used.

A significant drawback of this algorithm is the slow speed of operation and the increase in the volume of transmitted data. Therefore, additional encryption of public addresses is usually not used.

There can be many open addresses - if one of them gets lost, you can create more based on the closed one. And each of them can be used to verify digital signatures made on the basis of a private code. This is done, for example, due to the ECDSA algorithm used in the Bitcoin and Ethereum blockchains.

Conclusion

Using asymmetric encryption is one of the easiest ways to achieve high transaction confidentiality and eliminate trust issues. And despite the fact that this method is already quite a few years old, it continues to develop and improve, since no alternative has been created for it yet. Therefore, the security and confidentiality of most wallets existing in blockchain networks is still determined by the private key and various methods of encrypting it. This is what ensures not only the safety of finances, but also the ability to carry out transactions without fear of scammers.