Private keys have been part of Bitcoin from the beginning. Wallet software often tries to shield users from the need to directly handle and understand private keys. Even so, most users eventually come face to face with private keys, too often with unpleasant results. A basic understanding of private keys can protect you from losing money and other mishaps, but it can also offer useful insights into how Bitcoin works.
Bitcoin may be best known as an electronic cash system , but underneath it all runs a secure messaging system built on the Internet. Instead of relaying emails, texts, or web pages, the Bitcoin network processes value-transfer messages called transactions.
Private keys help authenticate these messages and identify each other. An example helps illustrate the problems that private keys solve. To do so, she must create a transaction identifying Bob as the payee. Then Alice needs to publish the transaction to the Bitcoin network. Bitcoin solves both problems through a system called public key cryptography. This system uses two pieces of information to authenticate messages. A public key identifies a sender or recipient, and can be distributed to others.
A private key creates an unforgeable message signature. Unlike the public keys, the private key must be kept secret. Public and private keys are mathematically linked through a signature algorithm , a mathematical procedure for creating identities, signing messages, and validating signatures. With this overview in mind, here are six things about private keys to keep in mind as you use Bitcoin.
A Bitcoin private key is simply an integer between one and about 10 If you could process one trillion private keys per second, it would take more than one million times the age of the universe to count them all. Even worse, just enumerating these keys would consume more than the total energy output of the sun for 32 years. Given the importance of keeping private keys secret, they are sometimes encrypted. To prevent forgery, Bitcoin requires that each transaction bear a digital signature.
This signature, like a private key, is just a number selected from a very large range. Wallet software generates a signature by mathematically processing a transaction together with the correct private key. Anyone with a signature and public key can easily authenticate a message.
However, the only way to produce a valid message signature is to use the private key matching the published public key. In other words, digital signatures are practically impossible to forge. Unlike a physical signature you might write on a check, a transaction signature changes if the transaction changes even slightly. The way the signature will change is unpredictable, ensuring that only a person in possession of a private key can provide the correct signature.
Notice that the internal format of a transaction is less important than the idea that transactions are digitally signed messages whose authenticity can be quickly and cheaply checked. Any valid transaction bearing a valid signature will be accepted by the Bitcoin network. At the same time, any person in possession of a private key can sign a transaction.
These two facts taken together mean that someone knowing only your private key can steal from you. Many avenues are open to thieves who steal private keys. Two of the most popular are storage media and communications channels. For this reason, extreme caution must be taken whenever storing or transmitting private keys.
Wallets often place this file in a standard, well-known directory, making it an ideal target bitcoin-specific malware. To counter this threat, software wallets offer an option to encrypt the wallet file. Any attacker gaining access to your wallet file would then need to decrypt it.
The difficulty of decryption depends on the quality of the encryption and strength of the password being used. Wallet files can be encrypted on many software wallets by adding a password.
Although wallet backups are a good idea, they can potentially leak private keys. For example, it may be tempting to save a backup of your software wallet to a cloud storage service such as Dropbox. However, anyone capable of viewing this backup online a potentially long list of people would be in a position to steal some or all of your funds. A similar problem could arise through emailing backups to yourself or leaving a private key around the house.
Encryption can reduce, but not eliminate the risk. A public key is obtained by subjecting a private key to a set of mathematical operations defined in a set of standards known as Elliptic Curve Cryptography ECC. Whereas a private key is an integer, a public key is a 2D coordinate composed of two integers. To make a public key easier to process, it can be transformed into a single value. One approach appends the y-coordinate to the x-coordinate. Each of these steps is irreversible.
Just as private keys can be shortened to make them more usable with displays and keyboards, so too can public keys. An address results from applying a multi-step transformation to a public key.
Notice that no network is needed at any point in the generation of a private key or the corresponding address. Every computer on the Bitcoin network knows about the mathematical relationship between public and private keys.
This enables each participant to select private keys and sign transactions independently of the Bitcoin network. The vast private keyspace ensures that any properly-selected key will be unique. Knowledge of a private key is the only verification needed to spend an electronic coin. Private keys should therefore be kept secret. However, careless selection of a private key can lead to theft just as easily as its accidental release.
The number 1 is both easy to remember and a valid Bitcoin private key. But how secure would it be? If you wanted, you could easily spend any available funds at this address because the private key is known to you. One strategy might be to compile a list of easy-to-remember private keys. Next, generate the addresses for these keys and monitor the Bitcoin network for incoming payments to one of them.
When one arrives, immediately sign a transaction moving the funds to another address you control. Contrast the ease of this scheme with a situation in which a private key was chosen by a perfect random number generator. With no clue what the key might be, brute force iteration would be the only option.
What would happen if the random number generator were not quite random? For example, what if all output private keys were clustered about a constant value within a narrow range? Any attacker aware of such a defect could drastically reduce the necessary search space. Under the right conditions, it would become practical to monitor all of the addresses based on the faulty random number generator and steal funds from any one of them at will.
The need to select a good private key becomes especially important with brain wallets. Applying the most popular conversion algorithm SHA to this passphrase generates the address:. As you can see, this address was used as late as to store funds, which were immediately withdrawn. Attackers can exploit this uncertainty and the inexperience of new users to steal funds. For example, a thief might compile an enormous database of common phrases and passwords.
Such a database might number in the trillions of entries or more, but would still be searchable in its entirety with little computational effort. Compare this situation to the one with website passwords. Bitcoin private keys are different in that they serve the dual role of user identification via address generation and authentication via digital signatures. For the most part, wallet software hides the process of generating, using, and storing private keys.
However, private keys can become visible from time to time. When this happens, understanding private keys and how they interact with your specific software becomes important.
Paper wallets present the most common route by which private keys show up outside of software wallets. Although they come in a multitude of formats, the essential feature of any paper wallet is a printed private key. Many software wallets support sweeping.
This procedure may or may not empty the address associated with the private key. Should your wallet application begin to malfunction, its private keys can often be imported into another application. This rescue procedure provides the second main route through which private keys become visible to end users.
A closely-related procedure consists of restoring the state of a software wallet through a backup file. Bitcoin can be thought of as an open messaging system secured by public key cryptography. In contrast to other systems protected by username and password logins, Bitcoin is secured through digital message signatures created with a unique private key. This single point of access places a very high value on the secure generation, use, and storage of private keys.
No games, no spam. When you sign up, I'll keep you posted with emails per week. Unsubscribe at any time. Bitcoin: A Secure Messaging System Bitcoin may be best known as an electronic cash system , but underneath it all runs a secure messaging system built on the Internet. To use this system, Alice must solve two fundamental problems: Alice needs a way to identify both herself and Bob in the transaction.
Alice needs a way to prevent others from changing her transaction and forging transactions in her name.
Planning is the key to success – Know what you need to do before you do it.
These keys are what makes Bitcoin the safest and most widely used cryptocurrency. It has a unique and specific number an address. I feel that understanding the underlying technical aspect of keys is important so that your remain better informed and educated enough to take care of. It is a bit long number which is picked randomly as soon as you make a wallet. The degree of randomness and uniqueness is well defined by cryptographic bitcoon for security purposes. They are the key to spending and sending your bitcoins to anyone wnat .
Bitcoin For Dummies
Wallet programs create public keys to receive satoshis and use the corresponding private keys to spend those satoshis. Wallet files store private keys and optionally other information related to transactions for the wallet program. Two wallet programs can work together, one program distributing public keys in order to receive satoshis and another program signing transactions spending those satoshis. Wallet programs also need to interact with the peer-to-peer network to get information from the block chain and to broadcast new transactions. This leaves us with three necessary, but separable, parts of a wallet system: a public key distribution program, a signing program, and a networked program. In the subsections below, we will describe common combinations of these parts. Note: we speak about distributing public keys generically.
Public and Private Key- How it works in Bitcoin.
Save my name, email, and website in this browser for the next time I comment. Any attacker gaining access to your wallet file would then need to decrypt it. However, private keys can become visible from time to time. Although there are some optimizations in the vanity generation algorithm, the process essentially involves picking a private key at random, deriving the public key, deriving the bitcoin address, and checking to see if it matches exchanges biggest usa cryptocurrency desired vanity pattern, repeating billions of times until a match is. Now that we have defined addition, we can define multiplication in the standard way that extends addition. Paper wallets A paper wallet is the combination of the private key s and a public key printed out most often, including QR formaton whatever material you decide to print on. Example keys generated through bitaddress. With a desktop wallet, you are in total control of your coins and their security since your private key is stored on your hardware. Some hardware wallets may prompt for a passphrase or PIN number. This tangent will intersect the curve in exactly one new point. Hot wallets In contrast to cold wallets, hot wallets are always connected to the Internet. There are various factors to consider while deciding on which Bitcoin wallft to use. However, the only way to produce a valid message signature is to use the private key matching eky published public key.