The Bitcoin private key is a crucial part of how Bitcoin works. Essentially, the private key is used to identify the legitimate owner of the wallet and must be secured to maintain access and prevent hackers. This article is a must-read for users who are looking to purchase Bitcoin using an exchange.
- Private keys are secret codes that allow Bitcoin to be accessed and spent.
- Bitcoin owners must keep private keys secure and backed up.
- Private and public keys are not the same.
- The safest method of storing a private key is using a hardware wallet.
What Are Bitcoin Private Keys?
The private key for Bitcoin is a sophisticated form of cryptography that has been designed to permit access to the rightful owner of the Bitcoin. The private key is an important component of how Bitcoin and other cryptocurrency coins work, which contributes to the security of the asset against theft, fraud, and unauthorized access to funds.
What Does A Bitcoin Private Key Do?
The Bitcoin private key is represented by a secret alphanumeric password or number that allows you to send Bitcoin to another BTC address. The key is a 256-bit long number picked randomly after you generate your Bitcoin wallet. The degree of randomness and uniqueness of the private key is carefully defined by cryptographic functions to ensure maximum security.
The private key provides access to the owner of the Bitcoin address to withdraw the funds. If an individual loses their private keys, they will not be able to access the wallet to spend, transfer or withdraw Bitcoin. For this reason, it is extremely important to never let anyone know your private keys for Bitcoin (or any other crypto) and always keep them safe.
What Is A Public Address Or Public Key?
To perform transactions such as buying, trading, or selling, the owner of a Bitcoin hardware wallet is provided with one or more public addresses that are derived from a single private key. A corresponding public address (or public key) is generated from the private key via a complicated mathematical algorithm and problems that must be solved. An example of a Bitcoin public address looks like this:
Bitcoin owners can generate multiple public addresses for each wallet which can be seen and given to anyone to receive money. When using a Bitcoin trading exchange, users can generate a Bitcoin public key which is represented as a string of characters, or a QR code that can be scanned.
How Do I Get A Bitcoin Private Key?
Every wallet that is used to store Bitcoin will contain one or more private keys which are saved in the wallet file. That is, the private keys are mathematically related to all Bitcoin addresses generated for the wallet by the blockchain. When a new Bitcoin wallet is created, a unique private key will be picked randomly which is mathematically programmed to the specific wallet address. Multiple public keys can then be created using this private key which can be openly shared to send and receive funds to a wallet.
For example, if you create an account with a cryptocurrency exchange such as Coinbase to buy Bitcoin with cash, a BTC wallet will be automatically created to store the purchased BTC. This unique address will store and protect the asset while it resides on the exchange. A major difference is the private keys are held by Coinbase, not the account holder.
This means the security of Bitcoins is not in your complete ownership. When accessing the Bitcoin wallet, a unique public address or QR code will be generated to receive Bitcoin to the address. However, the private key will never be shown.
What Does A Bitcoin Private Key Look Like?
A private key for Bitcoin consists of a string of 256-bit number, however, the private key is usually represented in hexadecimal to reduce the length to 64 characters in the range 0-9 or A-F. An example of what a Bitcoin key looks like in the simpler hexadecimal format is:
In most cases, Bitcoin owners will not use the private key in its numerical value to access their wallet. It is too long and complicated to memorize or write down accurately. To make it easier, a root seed phrase (like a password) is generated with each Bitcoin wallet which is used to encode the private key.
A seed phrase is a list of words that can be used to recover Bitcoin funds on the blockchain. Multiple private keys can be generated from the root seed key, so it is important to keep the phrase safe at all times. If you use a Ledger Nano X to store Bitcoin, it will come with instructions to back up and recover the wallet using the provided seed phrase.
What Are Bitcoin Private Keys Used For?
A private key can be used by an individual to legitimately access and send Bitcoins on the blockchain. When a transaction is initiated, the software on the wallet will create a mathematical digital signature that is linked with the private key. The signature is used to verify the true owner of the user. Once the processing and verification process has been completed the transaction is broadcast on the blockchain ledger and cannot be reversed.
Can You Guess A Bitcoin Private Key?
A common question that is asked is whether a private key can be guessed to obtain illegal access to the funds. Given the complicated string of 256 unique alphanumerical characters, it is near impossible for someone to guess the private keys to access and steal your Bitcoins. There are millions of Bitcoin addresses that have been created with a non-zero balance. Therefore, the chance of someone finding a private key that matches your Bitcoin wallet is close to zero.
What Happens If I Lose My Bitcoin Private Key?
The private key is the only method to legitimately access and withdraw Bitcoins from the designated wallet that matches the digital signature. If the private key is misplaced, stolen, or lost, there is no way to gain access to the Bitcoins to make a withdrawal and the Bitcoin will be lost forever. This is why it is important to save the private key in a secure location and create a back-up.
Can A Bitcoin Private Key Be Hacked?
Theoretically, a private key can be hacked to compromise a wallet storing Bitcoin, however, it is extremely difficult to achieve and so far a private key to Bitcoin has never been hacked or compromised according to our research. A hacker must break the Elliptic Curve Digital Signature Algorithm that is used to ensure the Bitcoin is accessed by the rightful owner. There have been numerous attempts by hackers to crack into wallets with millions of dollars without any success.
Another method that has been used to break into a Bitcoin account is using brute force by guessing the private keys repeatedly until it works. A recent study was performed to estimate the time required for a computer to break the Bitcoin code. Based on the 256-bit number, it was estimated to take around 65 billion years.
Even though there has not been a reported case of a successful Bitcoin hack on a private key, storing Bitcoin in a reputable wallet has its pros. These devices store the private key which is kept secret and offline from the internet, significantly reducing the risk of compromise.
How Do I Recover My Bitcoin Private Key?
Losing the private key that is stored on a desktop, mobile or hardware wallet can be a painful experience. However, it is very possible to recover the private keys if the wallet was backed up with a seed phrase, or similar code depending on the wallet. If the individual has lost the private keys and recovery phrases, the Bitcoins on the wallet will be lost forever.
Depending on how the private keys were lost in the first place, the seed phrase can be used to recover lost crypto that was stored in the wallet. For example, if a hardware wallet is lost or stolen, the owner of the asset can use the seed phrase to transfer the private keys to a new wallet. Once the private keys have been imported, the Bitcoin funds will appear in the wallet software within a few minutes.
The private key is a fundamental aspect of how Bitcoin works and hopefully, readers will now understand the importance of the Bitcoin private key to maintaining access to their wealth. Without the private key, you will not be able to send Bitcoins to another wallet address. One of the best methods to secure the private key is using a hardware wallet. Secondly, keeping the recovery phrase in a secured device. For further information, here's a list of the best crypto seed phrase storage devices to protect your crypto.