Potentially the most important point for all money-related issues is safety. Cryptocurrencies are no exception. At the moment, there are billions of dollars stored in digital assets in circulation on the market. If you are a cryptocurrency owner, you need to be sure that all your money is safe. In this blog post, the Grapherex experts explain how encryption works and discuss ways of protecting your wallets with crypto assets using public and private keys.
What Is Cryptocurrency Encryption?
When data is turned into a complex code, it can only be decoded using a certain key, thereby ensuring the security of digital assets in the system and not involving a central regulatory authority. This method of data protection has become the basis of cryptocurrencies and web3.
There are three types of data encryption:
Symmetric encryption: a method of coding a message using the same key to both encrypt and decrypt the data.
Asymmetric encryption: creating an extra security level using two different keys to encrypt and decrypt data.
Hybrid encryption: combining the effectiveness of symmetric encryption with the convenience of the asymmetric method.
Most cryptocurrencies, like Bitcoin, use asymmetric or hybrid encryption so that access to the crypto is available only to the cryptocurrency wallet owner. In cases with asymmetric and hybrid encryption, only users with private keys can decrypt the data. Let’s see how it works in more detail.
What Is a Public Key?
A public key is a long string of characters which makes up a unique wallet address that anyone can use to direct cryptocurrency. It is similar to a bank account number, which people use to send money. The public key can be shared with anyone, and there is no need to keep it safe. Moreover, when you make a cryptocurrency transaction, the public key appears in the open digital ledger.
What Is a Private Key?
A private key, also known as a secret key, is similar to a password or a bank account PIN code. To verify a cryptocurrency transaction and get access to the wallet as the owner of the crypto, you will need to unlock it with your private key, typically represented as a mnemonic phrase, a QR code, a binary code, or a hexadecimal code. A private key proves the ownership rights to a specific wallet address, so it should be very carefully secured. You must not share your private key with anybody.
Public Keys vs Private Keys
With the current prevalence of fraud, you need to be aware of how encryption works. A popular and secure way to generate a keypair is through the use of an RSA algorithm. This algorithm creates a public and private key that are mathematically linked to each other. Public keys can be used to encrypt data, and only the matching private key can be used to decrypt it.
Even though the keys are linked together, they cannot be derived from each other, so the private one remains secure. Applying a one-way mathematical function to a private key makes it almost impossible to determine it with the public key alone.
Let’s sum up the main differences:
The Grapherex platform has designed a secure multi-currency wallet that also uses modern encryption to make users feel safe. Explore more on the website: grapherex.com.