Understanding Private and Public Keys in Cryptocurrency

Introduction

What Are Keys in Crypto?

Think of your regular keys and how they help you gain access to your apartments. Keys in the crypto sense have a slightly different functionality.

In cryptocurrency, keys refer to a combination of numbers and letters that give you access to your crypto funds stored in a crypto wallet. When a crypto wallet is created, two keys are automatically generated. They are the private key and the public key.

A public key is a string of letters and numbers that allows you to recieve funds into your crypto wallet;and it helps miners to validate the transaction involving the sender of a cryptocurrency and the reciever.

What this implies is that your public key is your public address with which you can recieve funds into a crypto wallet with a corresponding private key.

The following is an example of a public key: 0x4573b13866aB1e144AbC5477C8CaCa46436d0A89. The owner of this key is eligible to recieve corresponding crypto from a corresponding address available on a blockchain network, on a hardware or a  software wallet. 

On the other hand, a private key serves as proof of ownership and its primary function is authorizing transactions. It shares some similarities with a password that is linked to an email address but differs greatly in length and functionality.

One notable difference is while a password can be recovered via 2-factor authentication, a private key can never be recovered once it is lost. 

In essence, a private key not only gives you access to your crypto funds but it also enables you to authorise the tranfer of funds from your wallet to someone else's.

Private keys should be kept secure from strangers to prevent unauthorised access to your stored cryptocuurencies and potential theft. Public and private keys are integral parts of blockchain technology, enabling the sending and receiving of funds without the need for a third party to verify the transactions

Why Is It Important To Store Your Keys Securely?

Losing your private keys in crypto comes with serious consequences. There have been several reports of hacks and privacy breaches that have cost individuals and firms a fortune. Besides, losing your keys automatically means you lose access to your cryptocurrencies forever. Why is this the case?

Cryptocurrencies are decentralized, which means no third parties have access to your wallets, so you are responsible for every activity carried out on your account.

Unlike centralized banks, which makes provisions for password recovery, lost private keys cannot be recovered.

How To Store Your Private Keys

The following are the ways by which your private keys can be stored: 

Print or write it down on a piece of paper:

This is the traditional method for storing important details through writing or printing on paper. Written records are still very much in vogue, and they are effective.

Use crypto vaults:

Crypto vaults are a type of digital storage solution designed to provide enhanced security for cryptocurrencies. They offer several advantages over traditional wallets, especially decreasing the risk of human-prone error. Research the best platforms that offer cryptocurrency vault services. 

Store on Flash drive:

You can use offline flash drives that encrypt the data stored on them as an additional security layer for accessing your coins. This is only offers a temporary security measure but still a bit better that the traditional method. 

Cold storage: 

It involves keeping the private keys of a crypto wallet offline, thus reducing the risk of theft through hacking or other online security breaches. This offline storage can be achieved through hardware devices or paper wallets.

There are other unforeseen events that could lead to a user losing their keys, like death. To prevent this, it is  important to ensure that trusted individuals have access to your private keys and recovery phrases.

This can be done through various methods, such as securely sharing this information with family members or using crypto inheritance services.

Without these measures, your crypto assets could be lost forever, as accessing them without the necessary information can be extremely difficult.

It is also important to consider the legal and tax implications of inheriting crypto assets, as it can be a complex process. Private keys are delicate and should be treated like a prized possession.Finally, taking the right measures to protect and pass down one’s keys in case of any unfortunate occurrence cannot be overemphasized.