The differences between private and public keys are important to understand. While it’s not necessary to be an expert on the complex cryptography that goes into key creation, it’s beneficial to understand the overarching theory behind their use.
At the very least, you’ll know a bit about what’s going on behind the scenes when you buy, sell, or trade cryptocurrency and why it’s essential to keep your private key private.
Table of Contents
Encryption BasicsWhat Is a Private Key?What Is a Public Key?How a Private Key and a Public Key Work TogetherCore Differences Between a Private Key and a Public Key
Encryption Basics
Before we get into the private key versus public key discussion, it’s important to talk about the basic theory behind the encryption involved in creating and using them.
The relevant terms you need to know are key, symmetric, and asymmetric.
Cryptography Keys
A cryptography key is a string of characters used within an encryption algorithm for altering data so that it appears random.
In old-school cryptography, we might use a substitution cipher that looks something like this:
ABCDEFGHIJKLMNOPQRSTUVWXYZ
BCDEFGHIJKLMNOPQRSTUVWXYZA
So, A = B, B = C, C=D, and so on. With this cipher, both the sender and the receiver know to shift the bottom row of letters one space to the left.
The sender starts with the top row, finds the first letter of their message, moves down to the corresponding letter in the bottom row, and writes that instead.
For example, if we wanted to send you the word CAT and encrypt it with this cipher, we would write: DBU. You would then reverse the process to decode the message: Start with the bottom row and find the corresponding letter in the top row.
This is a very basic example, but it serves as the foundation for more complex cryptography.
Symmetric Encryption
Symmetric encryption involves using one key to encrypt the message (or data) and the same key to decrypt the message.
The simple substitution cipher mentioned above is an example of symmetric encryption. There is only one key — shifting the English alphabet one space to the left — and both the sender and the receiver know what it is.
The problem is that you, the sender, have to somehow communicate the key to the receiver so they can decipher the message. That opens a whole range of security issues because a third party can intercept the key, read your messages, and steal your secrets.
That’s where asymmetric encryption comes in.
Asymmetric Encryption
Asymmetric encryption involves using a pair of keys — one private and one public — to encrypt and decrypt data.
The public key is generated from the private key using complicated mathematical algorithms, including Rivest-Shamir-Adelman (RSA), Digital Signature Standard (DSS), and Elliptic Curve Cryptography (ECC).
The public key can then be openly distributed so that anyone can use it to send data (or cryptocurrency in this case) to the owner of the public key. Once data is encrypted with the public key, only the private key can decrypt it.
And just so you understand the complexity of asymmetric encryption, it is possible to reverse the process and figure out the private key from the public key, but it would take an eternity (more than 40 x 10^31 years) to compute using the most powerful processors now available.
What Is a Private Key?
A private key is a long series of letters (both lowercase and uppercase), numbers, and symbols combined in random order to create a password that the holder/owner can use to encrypt and decrypt messages (or data).
In the case of cryptocurrency, if you know the private key, you can access a crypto wallet and buy, sell, trade, or withdraw whatever you find there.
Because the private key gives access to everything, it’s essential to keep it as secret and secure as possible.
If you lose or forget your private key, you will not be able to access your wallet or its funds. Similarly, once lost or forgotten, there is no way for anyone else to help you recover the private key. Lose your private key and you lose your cryptocurrency.
A private key is an example of symmetric encryption. You could encode data with your private key and send it off, but the receiver would need that same private key to decode the data.
It’s very much like the simple substitution cipher we mentioned earlier in this article. You could use it to encode a message, but the receiver would also need the knowledge of the substitution cipher to decode the message.
How would you send that information — “I shifted the alphabet one space to the left” — to a single person securely without also making it available to hackers and spies?
With asymmetric encryption, that generates a public key.
What Is a Public Key?
Like a private key, a public key is a long series of lowercase and uppercase letters, numbers, and symbols combined in random order, using the private key to create a password that the holder can use to encrypt data.
Notice that the public key can only be used to encrypt data — it can’t be used to decrypt data.
That makes the public key ideal for sharing with others. Once a sender encrypts a message with the public key, the only way to decrypt it is with the private key.
A public key is a fundamental component of asymmetric encryption, which is the foundation of all blockchain and cryptocurrency transactions.
How a Private Key and a Public Key Work Together
Let’s use an example to illustrate how a private key and a public key work together to make asymmetric encryption and cryptocurrency security possible.
Imagine that Jane and Joe want to exchange private data — it could be anything from a text-based message (like “I love you!”) to cryptocurrency of some kind (like Bitcoin, Ethereum, or an NFT).
Jane uses her private key to generate a public key that she then sends to Joe (typically online via email or some other digital medium).
Joe uses Jane’s public key to encrypt the data he wants to transmit to her and then sends it out over the internet. When Jane receives the encrypted message, she uses her private key — that only she knows — to decrypt the data.
If Jane wants to respond to Joe, she uses Joe’s public key to encrypt the message and sends it off. When Joe receives the message, he uses his private key to decrypt the data.
During this process, it is entirely possible for someone to gain access to the servers handling the data and try to decrypt (or read) the messages. However, they would be unable to do so because they don’t have Jane’s or Joe’s private key.
This might not seem that important when a simple text-based message like “I love you!” is involved, but if Jane and Joe are transmitting cryptocurrency worth thousands of dollars, the security becomes crucial.
Someone might gain access to the servers handling the cryptocurrency transfer, but they won’t be able to redirect, steal, or take ownership of the coins or tokens because they don’t have the necessary private key.
Core Differences Between a Private Key and a Public Key
1) Cryptography
A private key and a public key are based on different cryptography.
As we mentioned, private keys are based on symmetric cryptography where a single key is used to transmit data between two parties.
Public keys, on the other hand, are based on asymmetric cryptography where two keys (a public and a private version) are used to transmit data between two parties.
2) Algorithm
A private key can be used for both encryption and decryption (in the case of symmetric encryption), while a public key can only be used for encryption (in the case of asymmetric encryption).
3) Speed
Symmetric encryption with a private key is less complex than asymmetric encryption with a public key. The differences in complexity make private keys faster than public keys.
That said, encoding and decoding cryptocurrency isn’t about speed; it’s about security. As long as it doesn’t take too long for the transaction to go through, the primary concern is keeping the data safe.
Partnering With the Right Crypto Platform
Whether you’re just getting started in cryptocurrency or you’ve been in it for a long time, understanding the difference between a private key and a public key is important for success.
But what’s even more important is partnering with the right crypto platform.
Make sure the platform you choose secures your personal information, offers a wide selection of cryptocurrencies, has low trading fees, provides automation for buying and selling, and makes it easy to execute your plans (no matter how complicated they are).
It’s also important to partner with a crypto platform, like Binance.US, that has experience, knowledge, and insight on all things crypto.
Binance.US gives you access to all the tools and information you need to make the right decisions and grow your portfolio.
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