Last Updated: 8 February 2022
You may have heard that the blockchain is secure and transparent. Also, thousands of transactions happen on the blockchain network every day. The users have confidence in using the blockchain because of security features protecting their assets and guiding general operations. Two essential features in the category that make using the blockchain seamless, secure, and effective are the private keys and public addresses.
What are Private Keys?
In the simplest terms, the private keys give you exclusive access to your crypto wallet. It is a series of numbers and figures that are known to only you. We can also describe the private key as your password to access the crypto wallet. Without it, you may not be able to perform regular tasks using the tokens stored in your wallet.
Also, the private keys must be entered when you want to transfer part of your tokens within your wallet. So, it is not only used for external transactions.
The miners are responsible for generating the private keys as alphanumeric characters, which they send to the owner of the wallet.
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On the other hand, the public keys feature alphanumeric characters, which you must send to people who want to transfer cryptocurrency into your account. That is to say, when you render a service or sell products, you will need to send your public key to the buyer to enable them to transfer the agreed value of tokens to your wallet as payment.
The blockchain network uses the proof of work process to facilitate transactions and transparency for crypto deals. The miners have access to the network to view transactions that have been initiated via smart contracts. That means the miners validate blocks, which feature multiple transactions before a payment goes through. Then they approve the encryption process that allows tokens to be transferred from one wallet to another.
Essentially, the miners encrypt all transactions on the blockchain. Therefore, only the public key is visible, while the private key remains hidden.
Miners earn their keep after validating blocks on the blockchain network. They use massive amounts of computing power to make their jobs quicker and more effective. For every block a miner validates, they get paid in tokens.
The miner’s tasks involve solving mathematical puzzles. When they complete that task successfully, the miner uses the answer to encrypt the transaction as a block that is registered on the blockchain, which serves as the public ledger.
Potential Challenges in Using Public and Private Keys
Considering that crypto investors and traders will be using the public and private keys often, it is a good idea to explore the possible issues that can arise during use.
We have identified two common problems that users report when they have challenges:
Challenges in Locating the Keys Online
From the reports, this usually happens with the private key. Before using your wallet on the internet, you need to enter your private key. It is a string of alphanumeric characters such as B3829H2194L583. You will also need your wallet address; it looks like this- A693672K80G. These are unique access codes that allow the blockchain to identify you among millions of other users. Unfortunately, so many users on the blockchain forget their wallet keys and address.
To avoid this issue, you can consider using a wallet address that allows you to link the public key to a registered domain name known only to you. This makes it easy to use the public key whenever you like.
Challenges in Using Too Many Wallets
Some people diversify their crypto assets by storing the tokens in many wallets. This is a good idea if you can keep all those private keys properly. But that is hardly the case. We have heard too many reports where people forget or lose their private keys for some important wallets holding the majority of their crypto assets.
To avoid this issue, we suggest you should write the private keys on a piece of paper, then indicate the wallet for that key as well. This will help you avoid mixing things up if you use multiple wallets to store your crypto. You should store the paper in a safe place, preferably a private study or a safe. We do not advise that you store this information online. It is too risky.
Alternatively, you can use a universal tool that allows you to use only one private key for all your crypto wallets. This saves you the stress of managing different private keys, which can be mixed up.
The blockchain and its mode of operation have already been established. That means, for now, we have to adjust to its principles. Losing your private and public keys may cause you to lose your crypto assets forever.
For now, we should explore the different options available to keep our private and public keys safe. While hoping for innovations that can improve these features in the future.