How Do Public and Private Keys Work in Blockchain Technology?
Do you know what crypto millionaires and the best blockchain developers have in common?
They both know how public and private keys work.
These cryptographic keys unlock a realm of digital wonders on the road to creating a decentralized future. Prepare to embark on a thrilling journey where secrets are safeguarded, transactions are sealed, and technological sorcery unfolds. The mysterious link between public and private keys will be unraveled, and you’ll discover the key (pun intended) to unlock the hidden treasures of encrypted messages.
What are public and private keys?
Public and private keys are the fundamental building blocks for encrypting transactions, hashes, and messages. The public key is open for everyone to view and serves as an address. Instead of putting everything out in the open on the internet, the public key acts as a padlock, ensuring data is securely transmitted.
On the other hand, the private key is used to unlock the messages encrypted with the public key. Think of public and private keys as digital locks and key pair. Together, they ensure the safety and security of communication, ownership, and authentication in blockchain technology. It’s hard to imagine how public and private keys work without an example, so let’s get right into it.
Sending a secret message
Imagine you’re an ancient Spartan general about to march into battle with your enemies in ancient Greece. You’ve planned to charge at your enemies from the front with several platoons, making the enemy think that’s your entire army. But, just before you clash, your allies will come from the sidelines and ambush their escape while you emerge victorious. That’s a brilliant plan, and you need to send this information to your allied armies.
You can write a letter, and you send it through a messenger. But, if your messenger gets caught by the enemy forces, they will know and anticipate the attack.
To avoid that, you scramble the words in your message and replace every letter with a number or a different letter. To read the message, the readers need to know the password, i.e., how to read the message correctly.
Similarly to this example, the real ancient Spartans used wooden rods and leather straps to send war messages. At that time, the only way to read the messages was to use the right rod for the specific message.
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Sending a modern secret message
Over time, the world got more sophisticated, so we’ll fast forward to the future. The need for sending secret messages still exists. You might want to tell your co-worker a new gossip or send a love letter to your crush. Instead of sending a messenger and using wooden rods and leather straps like in ancient times, we use the internet and mail.
Let’s say you’re the CEO of Coca-Cola, and you need to send the recipe for making it to a branch manager that’s responsible for starting production in a new factory. If someone were to see the contents of that message apart from the branch manager, the secret would be out, and the entire world would know how to make this beverage.
You decide to use a program to encrypt and lock the document you’re about to send with a password and press send via email. Now, the branch manager receives the document, but they don’t know how to open the message because they’re not in on the password to decrypt the contents. Simply said, they don’t have the key to unlock it.
The problem that arises is telling the manager the password. If you send it via email, someone who’s been eavesdropping on your conversation can see it. From then on, they’d know how to unlock every new message between you two.
This is a perfect example of symmetric encryption. In this case, you use the same password to lock and unlock your messages.
How to make a modern message top secret?
Asymmetric encryption is one of the best ways to send a modern message and ensure that no one apart from the two parties communicating can read it. Using this method, the Coca-Cola secret will be safe, and you’ll use public and private keys. Here’s why.
Let’s imagine that instead of sending the encrypted message to your branch manager via email, you decide to go back in time and use a mailbox. Anyone who knows where you live knows the location of the mailbox, and they can send you letters. This is considered public information. But, since you’re the owner, you have the key to unlock it and read all the messages.
Now, let’s look at this from a technical standpoint. There are two main pieces that complete the puzzle. One is the public information of the mailbox, and the second is the private key you have in your pocket to unlock it and read the messages.
When communicating with asymmetric encryption, the two people sending messages must have a public and a private key. The most common algorithms to mathematically create public and private keys are the RSA and the ECDSA.
The public key gets used to encrypt messages (lock them), and the private key is used to decrypt messages (unlock them).
Additionally, even though public and private keys are linked together, there’s no way to use one to get the other.
Sending messages with public and private keys
As the CEO of Coca-Cola, you now know about public and private keys and asymmetric encryption. Now, you decide to send the top-secret message to the new branch manager. Here’s how that will go.
You start by sharing your public key. In a traditional sense, that will be like sharing your address so they know where your mailbox is located. Since you have the public key of your branch manager, you decide to encrypt the top-secret Coca-Cola formula with it. Then, you send it over to them, and they use their private key to unlock the secret, read the message, and start production.
No one else in the world apart from the branch manager would be able to read the message. Not even you.
The condition for this type of communication to work is to keep your private keys, well, private. If you share your private key with someone else, they can decrypt every message you receive. It would be just like making a copy of your mailbox key.
This communication between public and private keys is essential for internet communication, including visiting secure websites, sending emails, and, of course, sending cryptocurrencies.
How do public and private keys work in blockchain technology?
When creating a cryptocurrency wallet, you also generate public and private keys. The public key is your wallet address. It’s the information you share with your friends so they know where to send you Bitcoin, Ethereum, and other cryptocurrencies. The private key is only for yourself; you don’t share it with anyone.
Imagine the public key for your wallet as your PayPal email. Everyone who has it can send you money. The blockchain is fully transparent, and everyone can take a peek at who’s sending and receiving transactions.
Furthermore, the private key, i.e., your password, is used to sign contracts and send transactions. That’s why it’s super important to keep it safe.
Is a private key the same as a seed phrase?
A private key is an incredibly large string of binary codes, meaning ones and zeros. Most people who have created a crypto wallet have seen seed phrases, 12- to 24-word combinations you can use to unlock a wallet. But that’s just the encoded private key. It’s much easier to remember 12 English words than a combination of 256 ones and zeros.
Additionally, if you like to keep all of your coins on an exchange, you’re not your private key’s owner. It belongs to the centralized entity. The situation is similar to a bank. The bank has vaults for your items, and you decide to place a few ounces of gold. They’re the ones holding it, and you’re trusting them because it’s much safer than doing it at your own home.
Because of this, the saying “not your keys, not your crypto” came to be. In many instances, centralized exchanges have locked withdrawals, and plenty of users suffered major losses. Individuals are encouraged to take control of their assets by using hot and cold wallets on decentralized exchanges instead of trusting companies with their tokens.
Burning tokens
If you’ve been in the crypto space for a while, then you’ve probably heard about coin burning. Ethereum, the second largest cryptocurrency in the world, regularly undergoes burns. The same is true for hundreds of altcoins that serve as variations of it.
Based on the underlying tokenomics, cryptocurrencies are divided between having a finite and an infinite supply. Bitcoin is capped at 21 million tokens. No matter what happens in the world, the creator behind it locks it to a number, and there’s no way to change it.
Ethereum, on the other hand, doesn’t have a finite supply. But that’s why burning was implemented. Miners, validators, node operators, and stakers usually decide when and whether a certain quantity of tokens should be burned. That stabilizes the price because the tokens are being sent to an inaccessible address made for burning. Because no one in the world has access to the private key for that address, transactions can’t be made from it, and the coins are completely unreachable.
Can hackers crack a private key?
If a hacker knows your email address, they can do something called a brute force approach and guess your password just by trying too many times. They can check with a database of the most commonly used passwords and then try random strings of letters and numbers until they get to the right one.
This might take time, but it usually works. However, does the same tactic work when cracking 256-bit secure private keys?
The short answer is no. 256-bit security means that you would need a computer to check 2^256 combinations to crack the code and unlock the private key.
The human brain can’t even fathom how big that number is. Just for a comparison, even if everyone living in this world had a powerful computer as 1000x the number of servers that currently exist, and there were 4 billion copies of our planet in 4 billion galaxies. They checked for the private key for 37 times the age of the entire universe, they would have a minuscule chance of guessing the right one.
A one in 4 billion chance to be exact.
It’s safe to say that the technology behind the blockchain is robustly secure.
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How to safely store your private keys?
Right off the bat, storing your crypto wallet seed phrase in your phone notepad isn’t a good idea. The private key itself is impossible to crack, but finding where you’re storing it is incredibly easy. Most people just create a document on their desktop containing the seed phrases for all of their wallets. If a hacker takes control of your device, it will be incredibly straightforward to drain all of your assets.
Here are some of the ways in which you can safely store your seed phrases and private keys.
Use a hardware wallet
A hardware wallet is a perfect example of cold storage. If your password isn’t online, no one will be able to find it. Hardware wallets rarely get connected to the internet, which makes them incredibly safe and one of the best options to safely keep your crypto assets.
USB drive
A USB drive is a DIY hardware wallet. You buy a flash drive with the sole and proprietary purpose of keeping your password. This piece of electronics should never fall into the wrong hands because if someone were to open it, they could simply open a document and read it. Adding a layer of encryption or using cryptography could help, but the chances are slim.
Cryptosteel
Steel doesn’t rust, and it can’t malfunction. Cryptosteel is a costlier way to store information, 96 characters to be exact. If you keep your secret phrase on steel, you can be sure that it can’t be ruined in a flood or fire. However, it’s much costlier compared to other options.
Paper
There have been books that have survived for thousands of years. The paper doesn’t forget. If you don’t have a ton of crypto, opting for a regular notebook will get the job done. Of course, you can decide to make matters as easy or as complicated as you like. Level one would be writing the wallets and the corresponding seed phrases. Level two is writing three to four words from the seed phrase into different notebooks and spreading them out to different places. Level three is printing a piece of paper with the private and public pair and storing it in a vault. The list goes on.
Remember it
If you’re good at remembering, then nothing is safer than your own head. Depending on how much you trust yourself, this can be the best or the worst option out there. Most people forget their phone numbers after a while or their passwords after not using them. If you decide to keep your secrets in your head, make sure you recheck your knowledge once in a while to make sure you’ve still got it.
You don’t want to wake up one day only to realize that you’ve forgotten the private key of a wallet of a meme coin that just pumped.
Put it in your will
Crypto is a niche that has the incredible potential of turning a few hundred bucks into generational wealth. The price of Bitcoin is enough to make people scratch their heads when they see how it all started and what it looks like now.
Putting your private key in your will is a way to ensure that no matter what happens to you, someone else will be there to unlock the funds. Of course, there are many swings of the bear and bull markets, too many coins go to zero, and there are thousands of scam projects. Even though the entire niche is dangerous territory, having an inheritor of your funds is wise.
However, make sure you’re not too boastful of your earnings and your balance. As the saying goes, too much money can hit people in the head. There have been too many cases of friends or family members harming people with major crypto holdings. Keep it safe, and keep it quiet!
Don’t keep it online!
Email, Google Drive, Messenger, and the list goes on. All of these tools are great for communicating and collaborating, but they’re not made to be used as places where you store your financial information. The cloud is the biggest security risk, and you have the highest chance of getting hacked. All it takes is for you to connect to a public Wi-Fi once and wonder where all of your cryptos went.
Protecting yourself by using such techniques as a VPN, static IP address, antivirus solution or so on are one of the options you can take to keep your online security on a high level. However, paying attention to the latest cybersecurity trends is definitely a must. Crypto holders are major targets of scams and phishing attacks. Sky Mavis is just one of the examples of a company that got targeted with a recruitment scam to steal 600 million dollars over an extended period of time.
A few final words
Understanding the relationship between public and private keys is essential to understanding blockchain technology. Not your keys or crypto will forever remain true, so always be careful and considerate where you store your seed phrase. Finally, take control of your finances by using trusted exchanges if you decide to opt for hot storage or use a decentralized wallet to be even more secure.
Source: https://techreviewer.co/blog/how-do-public-and-private-keys-work-in-blockchain-technology