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Bitcoin Keys

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What Are Bitcoin Keys?

What Are Bitcoin Keys?

Bitcoin keys are randomly generated strings of numbers and letters that are used to send bitcoin and/or verify ownership of a bitcoin address with a digital signature.

There are two main types of bitcoin keys: private keys and public keys. Private keys are used to sign transactions to send bitcoin while public keys which are used to generate bitcoin addresses to receive bitcoin.

Bitcoin keys are based on asymmetric cryptography, which means that the private key is used to sign transactions, while the public key is used to verify the signatures. This system ensures the security and integrity of bitcoin transactions by allowing users to prove ownership without revealing their private keys.

Private Key

A bitcoin private key is a string of characters (256-bit) that is mathematically derived from your wallet seed. Your wallet seed is commonly represented as a set of 12-24 words in what is commonly known as a seed phrase. Private keys are used to sign transactions to send bitcoin as well as prove ownership of a bitcoin address. It is essential to keep private keys safe and secure because anyone who possesses the private key has full control over the bitcoin at the associated address(es). Each private key generates a one-of-a-kind digital signature that enables bitcoin transactions to be sent by a wallet.

As the name implies, private keys are private and not intended to be shared with anybody. For ease of use and to reduce human error, bitcoin wallets encode private keys as 12-24 common English words commonly known as a seed phrase.

You can experiment with this private key explorer to learn more about bitcoin private keys and how they work.

Note: This is only for experimentation and learning. Do not ever input any real bitcoin wallet information into this tool.

Public Key

A bitcoin public key, also known as an xPub key, is used to generate all of the bitcoin addresses in a wallet to receive bitcoin. Although it’s called a “public key”, it’s still best practice to keep yours private because it’s used to generate all of the addresses in your bitcoin wallet. Anyone who has access to your public key knows which addresses are yours and the amount of bitcoin at each address. In the event that your xPub key is compromised, your funds are not at risk of being stolen but for best privacy practices, you want to keep your public key as private as possible.

Bitcoin Addresses

In an effort to increase privacy for bitcoin users, bitcoin payments are sent to addresses instead of public keys. Users don’t need to share their public keys directly. Instead, wallets manage public keys and generate a new address after each payment so that user privacy is preserved by not using the same address for every payment.

Who Controls Your Bitcoin Keys

Not your keys, not your coins is a common expression in the bitcoin community and for good reason. If you have your bitcoin on an exchange or are under third-party custody of some sort of bitcoin bank, you do not actually own your bitcoin.

The only person who is in control of bitcoin at an address is the owner of the private keys so it is of the utmost importance to store your seed phrase somewhere safe. For maximum security, a hardware wallet is best.

FAQ About Bitcoin Keys

  • Q: Can Bitcoin Private Keys Be Hacked?
    A:     If your private keys are generated with enough entropy, the number of possible permutations that an attacker would have to guess is so great that it is effectively impossible to hack via a brute force attack within the lifespan of the human race. While bitcoin itself is theoretically impossible to hack, there are still a number of different bitcoin attacks that can compromise your private keys if you are not securing them properly.
  • Q: Are private keys and seed phrase the same thing?
    A:     No, private keys and seed phrases are not the same thing. A seed phrase is just random data encoded in a human readable format that is used to generate multiple sets of bitcoin keys from a single piece of “seed” information. In short, all of the private keys in your waller are mathematically derived from your seed phrase.
  • Q: How are private keys generated?
    A:     Private keys are generated from your wallet seed. Your seed is a random combination of 256 0s and 1s. Your seed phrase is the human readable format of your wallet seed which is used to generate your private keys. Everyone should learn how to safely generate your own seed phrase to better understand how seed phrases and bitcoin security works.
  • Q: How do you store private keys securely?
    A:     The best way to store private keys securely is with a hardware wallet device for signing and sending bitcoin transactions. It is also best practice to write your seed phrase on something that will last more than a lifetime.