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To ensure verification of transactions in the Ethereum network, two primary “keys” are required; the private and key and the public key. Both are necessary to verify ownership as well as creating a secure transaction between two parties.
Private keys and the public keys are critical to the success of the Ethereum network.
Public Key: Public key is like is an account number that is used to send or receive cryptocurrencies from one wallet to another. These keys are in the form of long alphanumeric characters to keep the transactions safe and secure.
Private Key: Private keys can and should be known as your secret key. Your private key is used to verify ownership of the coins in that wallet. If someone gets access to your private key they get access to your crypto.
In short, both the public and private keys are combined to ensure safe transactions.
Let’s think of a mailbox that is used to receive physical mail. If someone wants to deliver mail, they must know about your address to reach your mailbox.
The address of mailbox in this example is the public key. Now to unlock the mailbox to open up the mail, you will need a secure “key.”
This key is a private key. If you lose your private key, this means that your mailbox is vulnerable and you will no longer be able to access what’s inside.
Ethereum private key is 64 hexadecimal characters.
Cryptography technique used in securing the transactions relies on a pair of private and public keys to send information or perform transactions.
The public key is broadcasted to all the participants of the network; the security of the key is ensured.
Private keys are used to create digital signatures for the transactions.
These signatures are in the form of a piece of code, ensuring that the author has made the transaction to whom the private key belongs.
This private key, then combined with the corresponding public key, completes the transaction record in the network.
The digital signature of the transaction record depends on two main functions;
This function includes the message we want to sign and the private keys. The output result is a unique digital signature for that particular message.
This function includes a message, the public key, and the signature. The output is in a binary format that shows if that signature is valid or not.
Cryptocurrencies have very high value, even if you are the owner of a single Bitcoin you own thousands of dollars. This thing attracts the hackers who want to steal your digital currencies, usually from your wallet.
There are various forms used by hackers to steal private keys from users. Phishing attacks or counterfeit hardware are one of the few examples.
If you are an investor, planning to invest in cryptocurrencies, it is better first to understand how the keys work.
It might seem straightforward to hack private keys from user’s wallets, but it is not like that.
Private keys are secured in such a way that it requires an immense computational power to steal the keys.
One possible scenario is the threat of quantum computers as quantum computing takes advantage of quantum bits or “qubits” that can exist in any number from 0 to 1.
Quantum computers are much more capable of processing instructions, then classical computers. This machine set is a threat for not only blockchain technology but also a cyber threat for online databases.
As discussed earlier, your account is defined by the private key, i.e., 32 bytes of random data. One who owns the private key owns your wallet, and it makes a whole lot sense if you are the one who owns it.
Ensuring the safety of private keys is critical. To ensure the safety of these keys, you could use safe wallets. Using the wallets, you could keep your currency secure and could perform transactions using that.
To take part in the trading process on the Ethereum network, you will need an Etherum wallet. A wallet is a piece of software used to store the currency, conduct transactions, and maintain your balance.
The currency Ether is not stored in the wallet, as these currencies don’t have any physical shape or form.
The record of transaction exists on the blockchain, and your wallet interacts with the blockchain to perform the transactions.
If someone wants to send you funds, they will need your public key that is linked to your wallet. Inside the wallet is a private key that we discussed earlier.
One of the easiest ways to store Ether is to use third party secure wallets. There are many options to choose from, depending on their nature of use.
Some of the top categories of the wallet include:
Full Node Wallet: A full node wallet allows you to have direct access to Etherum blockchain. Not having a full node wallet will require you to connect another node to receive information from the blockchain.
Hot or Cold Wallet: Distinct categories under other types of wallets come under are hot or cold wallets. A hot wallet is one in which the keys are stored online that can be accessed only with internet access. They are not very secure as having an online hacking attack could end up stealing your private keys.
Cold wallets, on the other hand, are stored offline, and you could use them whenever you want — making it less prone to online attacks and threats.
Paper Wallets: Paper wallet as the name suggests is the physical form of paper that hold the keys in printed or hand-written form. It could be regarded as one of the safest forms as they are neither offline nor online, but it could exist in your safe drawer.
Mobile Wallets: Mobile wallets are great to use on the go. As long as you have a cellular or wifi connection, you could use this form of wallet.
There are several wallets available in the market that you could use.
One of the best among them is Trezor.
Trezor was released as a hardware wallet for Bitcoin. One of the best features about Trezor is that it offers features of both the hot and cold wallet.
Trezor exists in the form of USB that stores the private keys of cryptocurrencies and signs the transaction.
It is one of the safest hardware wallets that also protects you from malware.
There are three ways with which you could set up your Trezor wallet.
When you use Trezor, you control the private keys.
This means even in case of any issue they keys could be backed up within an hour. A Secure pin code is required at registration.
There is a small screen attached to the hardware that shows the sending and receiving of payments.
If you want more information about Trezor take a look at our complete review of Trezor Cold Storage Wallet.
If you are considering a platform to sell your currency for cash, Coinbase is one of the best platforms for you.
Coinbase is digital currency wallet which allows the transaction of famous cryptocurrencies like Bitcoin, Ethereum, and Litecoin.
It is one of the best-trusted sites that allows you to sell most of the cryptocurrencies.
If you hold your crypto on the Coinbase, you could visit the selling page on the website.
Just enter the amount you want to sell, confirm, and finish. Coinbase is one of the most trusted sites when it comes to selling of cryptocurrency; sites have already served over $150 billion of crypto exchanges.
If you need more information on Coinbase we have a complete review of Coinbase and their earn free crypto program.
Ethereum is one of the top inventions in blockchain technology.
Etherum took advantage of the technology used by Bitcoin and expanded its capabilities.
Ethereum is not a currency, but it is a complete decentralized network having its Internet browser, programming language, and integrated payment system.
On the Ethereum Network, the users are also able to create decentralized applications. Ethereum supports the concept of decentralization to the highest levels.
The interactions on the Ethereum network are direct without the involvement of a third party.
Traditional centralized systems have a single entity to control things. The failure of that entity could lead to crashing of the complete network.
Moreover, your personal information or data is stored at a single place that the companies could sell or misuse it.
The main motive behind the invention of Bitcoin was to introduce the concept of decentralization to the digital world.
Over time, as the technology evolved, there was a need for a fast, safe, and decentralized platform that is not under any influence of a central organization.
The invention of Bitcoin became the foundation for blockchain technology, that wouldn’t have existed without the Bitcoin.
As Bitcoin was an open-source program, it allowed new technologies to be built on it.
Ethereum was inspired by Bitcoin and seems as it will continue to develop and do great things for the crypto community.