What is a Public-Private Key?
Though the name Public-Private Key sounds contradictory, this is not the case – each wallet has a combination of public and private encryption that are combined. These two keys are assigned to a specific address. This address is not disclosed but rather given a public key, which can be changed at any time.
The wallet address is just a hash version of the public key. With the public key, proof of an existing wallet address can be provided. This enables financial transactions between two wallets without consulting bank. The transfer of the cryptocurrency is handled by blocks in the blockchain. The required computing capacity is provided by mining.
How Does the Encryption of Public-Private Key Work?
The Public-Private Key is generated in a length of 256 bits, and the final hash has a length of only 160 bits. This ensures that the recipient of the Bitcoins is also the right person and the digital money gets where it belongs.
The Public-Private Key is controlled by mathematical algorithms. The public key is derived from the private key. The reversal, however, is not possible. The public key can only calculate the wallet address, not the owner of the wallet.
It is almost impossible for the same keys to be generated twice. That’s why a public key is a useful tool for transferring cryptocurrencies.
It may sound complicated, but the participants in the financial transfer of Bitcoin cryptocurrencies do not have to deal with it themselves because the software in the wallet takes care of the creation and coding of the keys. Therefore, a wallet is not only a wallet but also a bank.