The system of bitcoin transactions is based on the digital keys which are needed to establish the amount of bitcoins you own and to carry out transactions. Here we need to know more about cryptography, especially public-key cryptography because this science contains the full information about public and private keys and how they work.
This system also involves digital wallets – wallets that store your digital coins and are made of digital keys. Every wallet has its own address like the number printed on a usual paper bank receipt. The address includes a public key (the same as a name of account) and a private key (the same as a password). Public keys are open for everyone. But like when you use your credit card you should be attentive with your digital information and never share it. The security of your private key mostly depends on you.
Some More Information about Private Key
Private keys are formed accidently from bits. They look like a number made from 0-s and 1-s.
Let`s consider the example below:
For the person who does not understand IT it`s just a lot of 0-s and 1-s, but actually, it`s one of the private keys in the 256-bit system. And can you believe that really it is a number about 1077? Sounds impossible, does it?
However, there is some more interesting information about it. These 0-s and 1-s may form groups called half bytes. Half bytes include 4 bits, and here we have the following example:
1110 1111 0010 0011 0101 1010 1010 1100 1111 1001 0000 1101 1001 1111 0100 1010 1010 1101 1101 1000 1100 1001 0010 1110 0100 1011 0010 0101 0110 0010 1110 0001 1101 1001 1110 1011 1001 0111 1111 0000 1101 1111 1001 1011 1010 0011 1011 0101 0000 1000 0010 0101 1000 0111 0011 1001 1100 1011 0000 0001 0011 1101 1011 0010.
There may be only 16 different ways to make 4-bit groups, and half bytes also have to be from 0 to 15, like here:
With the help of this picture, we can make a usual number from the difficult combination of half bytes above. So, we will have something like that:
14 15 2 3 5 10 10 15 12 15 9 0 13 9 15 4 10 10 13 13 8 12 9 2 14 4 11 2 5 6 2 14 1 13 9 14 11 9 7 15 0 13 15 9 11 10 3 11 5 0 8 2 5 8 7 3 12 11 0 1 3 13 11 2
One more system of forming private keys includes not two but ten digits (from 0 to 9). It is called a decimal system. Another system – hexadecimal – has 16 symbols (digits from 0 to 9, and letters from A to F).
If we are able to transform our initial private key to any of these systems, we may change it to a hexadecimal system:
Private keys system functions through Base58 – structure which encodes binary texts with the help of the complete English alphabet and also digits from 0 to 9. To exclude the cases of mistakes these numbers are not used: zero (0), two cases of o, upper I, lower l. There is an example of such a private key:
It should be mentioned that these private keys begin with the combinations 5H, 5J, 5K.
The Role of Public Keys
This type of keys is needed to confirm your signature and to have the resolution to manage your bitcoins. Public keys are usually made from private keys, not backward. When a user publishes a signature and a public key, it proves the validation of the transaction so the operations can be successfully carried out. Hence, the participants of the transaction are aware of this information:
- The payment has surely been sent by the confirmed owner of the private key;
- While the transaction was taking place the owner had a certain amount of digital coins.
The Addresses of Digital Coins
To have access to the bitcoin address there used a mechanism called Secure Hash Algorithm. This system transforms any data to 256-bit code. Then, the code goes through the SHA again, to transform one more time with the help of another algorithm, RIPEMD-160.
In this picture you can see the whole process of this conversion:
Public and private keys are important elements of cryptocurrency system. To manage your amounts of bitcoins the right way you have to understand more in cryptography which gives you the knowledge about the verification of your ownership. The science of cryptocurrency continuous to develop so the security of your digital keys becomes more and more strong. In its turn, digital keys let the transactions in the bitcoin chain keep on going.