Wallets are used to securely store crypto assets and digital assets. Wallets that are used for securely conducting, safekeeping, or storing transactions of assets allow users to manage a pair of public key and private key. A wallet is a software or hardware tool that holds the keys required for a user to store and transact their digital and crypto assets. Crypto asset wallets facilitate the interaction between private and public keys. The user accesses their wallet using the private key and signs transactions to spend or transfer their assets. This transaction signature enables verification using the public key, ensuring the secure transfer of digital assets.
Wallets utilize cryptography and key management techniques to keep users' digital assets safe. Safely storing the private key and securely sharing the public key enable users to manage their digital assets with confidence.
The private key is considered one of the most crucial elements of crypto asset wallets. It grants the user access to their crypto and digital assets, authorizing them to spend or manage them.
The public key is similar to an address shared with individuals who wish to buy crypto assets or digital assets. It represents a publicly shared component of a user's crypto asset wallet and is typically a long and complex string of characters. The public key is used to encrypt plaintext content and consists of a series of alphanumeric characters. It serves as a cryptographic code that allows individuals to receive crypto assets in their accounts. Both the public and private keys play a significant role in the field of crypto assets.
How Does a Public Key Work?
When any investor or user initiates a crypto asset transaction with Bitcoin or other altcoins, a unique pair of public and private keys is generated. Each key helps the user securely store their crypto assets.
The private key is known only to the user and represents their digital identity. The private key grants the user authority to spend, withdraw, transfer, or perform other operations with their assets. The public key is derived from the private key through a complex algorithm and both keys are stored in the crypto asset wallet. When a user initiates a transaction to send crypto assets to another user, the transaction must be broadcast to the network for validation before being recorded on the blockchain, which is accomplished by distributed nodes in the network. Before the transaction is broadcasted, it is digitally signed using the private key. The signature proves the ownership of the private key without revealing its details. The public key, emanating from the private key, is then used to verify that the transaction is valid and to securely transfer the digital assets. Once the validity of the transaction is confirmed, the assets are sent to the recipient's public address.
Due to the length of the public key, the public address is compressed and shortened. The private key generates the public key, which in turn generates the public address. When two parties enter into an agreement where one sends crypto assets to the other, they disclose their public addresses to each other. The public address functions similarly to a bank account number. The sender needs this number to send the assets to the recipient, who can verify the amount of assets received using the sender's public address. This is possible because the public address is derived from the sender's public key and can be matched with the transaction data.