What is Private Key?
A private key is a security password used in crypto to allow investors to access their funds. It’s a long string of numbers and letters created the first time you open a crypto wallet.
As long as you have your private key, you can manage your coins from anywhere globally. The role of the private key in cryptography is to encrypt and decrypt the access to the crypto.
Private vs Public Keys
Often, the private key is accompanied by a public key from the first crypto transactions. The public key is the wallet address which you share with others for deposit of funds. A private key is quite the opposite of a public key in terms of usage and storage.
- Public keys are shareable, but private keys should remain anonymous; hence, you store them in a wallet
- Public keys are for funds deposits, while private keys open access to funds
- Public keys change per transaction. You can’t use a public key twice. But, private keys do not change.
When you make a transaction originating from your wallet, your private key’s involvement verifies that it’s you. By the combination of private and public keys, the network can prove that you sent the transaction.
Storing Your Private Keys
Generally, because of their importance in your crypto holdings, you must know how to store your private keys. There are two popular ways of storing private keys including;
- Hot wallets. A hot wallet is a storage system that relies on the functionality of the internet. Hot wallets are suitable for short-term holdings like when planning to exchange and trade. However, since they are internet-based, you can quickly lose your coins on hacks.
- Cold wallets. A cold wallet is an offline storage system for private keys. It involves putting your funds on computers, written pieces of paper, or even memorizing them. It protects your keys against hacking.