“Your keys, your Bitcoin! Not your keys, not your Bitcoin!”
Have you ever heard this famous expression by the blockchain developer and Bitcoin educator, Andreas Antonopoulos? This simple phrase illuminates the essence of a private key. It is direct access to funds or some kind of asset stored in a public blockchain.
WHAT EXACTLY IS A PRIVATE KEY?
A private key – a PK – is a long, encrypted alphanumeric string of random characters that grants full access and control of crypto assets stored in a blockchain. Possessing the PK represents ownership of an address that exists on a blockchain. If someone has a copy of your PK, that person is co-owner of the money or assets stored in the address associated to that PK. The following are a few facts that will help you get familiarized with the technologies of PKs.
FACT 1: YOUR PRIVATE KEY DOES NOT EVER NEED TO LEAVE YOUR WALLET
This is a strict rule that even some expert investors ignore: a PK should never even touch the Internet, for any reason. Not even to be sent from one person to their most trusted beloved one. One should never make the mistake of letting a PK even move through the Internet for one second. One should never send a PK through an email, store it in a cloud, or copy it in a WhatsApp or Telegram message. Never expose a PK to the Internet! Security provided by a blockchain depends on this!
The Internet seems to be inherently related to all aspects of Crypto! Wrong! There is no reason for a PK to ever be on the Internet! In order to access your funds or move your assets – for example when you want to do a payment in crypto -, you need to demonstrate to the blockchain that you actually own the PK that grants access to your money or your value. The complex cryptographic math involved with a blockchain will do the magic of demonstrating this to it for you, without your having to broadcast the PK to the it. The blockchain actually never sees PKs.
FACT 2: THE BEST KIND OF PK MIGHT BE THE ONE STORED ONLY IN THE MIND
If you have a modern wallet, perhaps you’ve never seen a PK, but you’ve seen a “seed”, a mnemonic code commonly referred to as a “mnemonic phrase”. A mnemonic phrase might look something like this: “Lonely Lovely Yellow Birds Fly Over Ancient Clean Rivers …..”. If you manage to memorize a phrase like this, it will be your PK. A mnemonic phrase aids human memory in remembering data effortlessly. Seeds actually are not PKs, yet wallets use them to generate many PKs. If stored only in one’s mind, one is the key.
FACT 3: IF YOU ACCEPT NOT HAVING ANY PKS, THEN YOU MAY BE HELPING CENTRALIZE CRYPTO
Having the right to exclusive possession and control over one’s PK is one of the most valuable historical achievements of cryptocurrencies. It means “I am the real owner of my value!” Exchanges and some wallets do not let you be in full, exclusive control of your money. Owning crypto without PKs represents a step back in self-empowerment. It constitutes the continuation of the worst part of traditional banking systems where institutions control people’s value. One should never forget the lesson: “Your keys, your money! Not your keys, not your money!”
AM I SAFE IF I SHARE MY PUBLIC ADDRESS?
Cryptographic Math Functions that run inside your Wallet – from within your PC, tablet or smartphone -, take your PK and generate public addresses from it. Nobody in the world can perform the level of reverse engineering that would be required to figure out the PK of a public address. This is virtually impossible! So, nobody can steal your money or value with your public address. With this said, you could rest easy when sharing your public address with anybody. Of course, one must be careful since in most blockchains, others can see the entire history of transactions when they have your public address.
BEST PRACTICE AND WORST MISTAKE
The best practice one can exercise with PKs is either to store them in their brain – as we already explained – or keep a copy or two of them on paper. This involves avoiding having them in digital form: the safest way to keep a PK is in cold storage or away from your computers and mobile devices. Nothing is safer than cold storage and fortunately there are some hardware wallets that seem to provide really nice options for security.
Wallets create PKs. The worst thing one can do is generate PKs from dubious online wallets or any unknown wallet. These wallets generate PKs as any wallet, but could secretly send them to third parties without your consent or knowledge. Many people make this mistake and lose money. Study your blockchain well and DYOR – do your own research – before choosing your wallet. It should be on your side and protect you. Knowing the wallet that manages your PKs well is as vitally crucial as knowing well a person you live with.