, 2 years ago
The „crypto“ in cryptocurrencies stand for cryptography. Bitcoin and other crypto rely on public-key cryptography. In this article, we answer two basic questions: How does it work and why is it so secure?
If you like to receive Bitcoin you’ll need an address. This address is the public key and enables anybody around the world to send BTC to this address. In this sense, it works pretty much like an account number. Public keys are pseudonymous, meaning that nobody can connect an address to you unless a connection to the owner gets somehow revealed.
While a public key enables you to receive Bitcoin it won’t allow you to spend the BTC that are stored on it. In order to control a certain public key, you will need control over its counterpart.
Each public key has its own private key assigned to it. They always come in pairs and each time you create a new public key in your wallet a private key is created along with it. Meaning that the private key is basically a secret that allows unlocking the amount Bitcoin received on its public key.
Needless to say, a private key should be treated like cash and is highly valuable. Whoever gets his hands on this secret will automatically control the respective public key. In order to make it easier to handle all these keys, there are different types of wallets.
If this type of application is new to you, you might read on to our different guides for hardware wallets, desktop wallets and mobile wallets.
Yes, because public-key cryptography is part of modern-day cryptography in many different fields and has a proven track record as well as a scientifically proven theoretical background. It is not only part of the foundation of crypto, but also of everyday use in IT.
E-mail encryption with PGP is a common example, as well as SSL encryption of websites or opening an SSH connection to remotely control a server or any other computer for that matter. All these things rely on the same principle, namely that there is a public key to encrypt data and a private key for decryption. That being said, blockchain technology like the one Bitcoin uses is not based on encryption rather on making use of digital signatures.
As long as you keep access to your private keys safe there is absolutely nothing to fear
Mar 30, 2023
Staking crypto is a way to earn crypto rewards. This article explains how staking works, the difference between on- and off-chain staking, and the risks involved.
Mar 15, 2023
Cryptocurrency mining is the process of verifying transactions on a blockchain network and adding them to the public ledger. The process involves solving complex mathematical algorithms using high-powered computers to generate new blocks of transactions. The reward for successfully mining a block is a predetermined amount of cryptocurrency.
Nov 28, 2022
After the successful Ethereum Merge, a potential censorship issue has crept up on Ethereum. In the new block production architecture, an increasing number of transaction blocks is being built by an organization called Flashbots. This organization has chosen to be compliant with the sanctions list of the American OFAC. This poses a risk of censorship on the protocol level of Ethereum. Flashbots is aware of this and has proposed a solution.
Sign up to stay informed via our email updates