Remembering 2017, when crypto-assets like Bitcoin became the only hot topic of the financial world. However, most people failed to learn and understand the working of bitcoin; others have discovered it thoroughly, invested in it and earned massive gains. Cryptocurrencies like bitcoin can provide higher returns in only a limited period, but it also comes with possibilities of cybercrimes. You can visit btqapp.io to trade bitcoin safely and earn profits by becoming a successful trader.
Every bitcoin investor must be aware of the methods to keep their crypto assets safe from cybercrimes. There might be a high risk to your private keys and funds, and once you lost your funds, there is no way to recover them. Therefore, it is crucial to understand and learn about digital keys and protect them from cybercriminals.
What are the public and private keys?
The term cryptocurrency is made up of two terms that are crypto and currency, and here crypto refers to cryptography. Cryptography is a method of securing information from unauthorized access by encoding or decoding the code or data. Blockchain technology also uses cryptography to secure the data and transactions of bitcoin users. Cryptography eliminates the need for validation or authentication of transactions from any third-parties, which is a feature of the Bitcoin network.
Miners are assigned the task of confirming the bitcoin transactions and recording them on the blockchain. The entire concept of mining uses mathematical equations to match the digital keys of bitcoin wallets. Both the public and private keys are a long string of letters and numbers that provide ownership of bitcoins. When a user creates a bitcoin wallet, it will randomly generate public and private keys. The public key is utilized to generate the code through the encryption method, whereas the private key is used to decrypt the code.
Significance of private key
When a user wants to send or receive digital coins, the bitcoin address or public key is required. Providing a public key to the sender will give them virtual access to your digital wallet. To complete a transaction, the transaction must be signed digitally using the private key. Let us understand how private keys play a significant role in success.
- Assume that private keys are digital signatures that are required but must never be shown to others.
- Private keys are used to confirm the ownership of bitcoins, deposit address, verify or approve the transactions and produce a public key.
- Only through private keys, one can access the wallet, and private keys allow the sender to send coins.
- The bitcoin network is designed to approve bitcoin transactions by automatically matching the public and private keys. If the keys don’t match, a transaction can never be completed.
- If anyone has access to your private keys, they will have access to your funds and your bitcoin wallet balance. An individual must never reveal private keys to anyone.
How to safeguard the private keys of the wallet?
You must have heard about various types of wallets that are used to store private keys. The best to safeguard your private keys is by printing them on paper by using a paper wallet. Users can store paper wallets in any unreachable place and can keep them safe in any locker. A paper wallet is a cold storage wallet that is immune to cyber-attacks and quickly recovers private keys if the wallet is lost. You can also consider hardware wallets as it is the best and safest way to store bitcoins.
Some wallets are available that allow private keys to be stored in a hardware device, computer or phone. Mobile wallets are the best and most convenient way to transfer funds anytime. Mobile wallets come under the category of hot wallets that are required to be connected to the internet. Users must avoid protecting their private keys in hot wallets as these are connected to the internet and makes wallet vulnerable to viruses, hackers, malware, phishing scams and more.
You can store your private keys safely in cold storage wallets that are offline wallets. Cold storage wallets may be less convenient but offer high protection to funds and private keys and will help in recovering assets if the device is lost.