Private Keys, Addresses, and Signatures

So you've just created your first wallet, and are ready to jump into the crypto world. Despite all the scary things you might hear about cryptocurrencies, there are really only two things that you need to know well to get started that are different from a traditional web service. Your private key, and your address.

What is a private Key?

To understand a private key it its first necessary to understand that cryptocurrencies aren't stored in your wallet. They are stored in the blockchain which a global database that can never be shut down or destroyed. However in order to access your funds on the blockchain you have to use your private key to UNLOCK them. So a private key is exactly what it sounds like, it is a key that unlocks access to your funds on the blockchain. It is meant to be kept private because anyone that has access to your key can unlock access to your funds on the blockchain.

So a wallet instead of storing your funds actually stores your private key. So your private key is almost like your "password" to the blockchain, so make sure to ALWAYS have a back up copy of your private key. Unlike other passwords it cannot be recovered if you lose it. Once the key is lost the funds are locked away forever in the blockchain

What is an address?

The next term that you probably have heard about is an "address." Your address is created using your private key, and how is people will know how to send funds to you. Unlike a private key it can be shared with anyone at any time. An address is very similar to a username, its a way for people to recognize you. An address that you might have would look something like this "AaUXsW6E2gKTuWhfeREiVjiBuWCYmqV4kt."

Make sure to not get the two mixed up. Your address is public information that can be shared with anyone without risk of losing your funds, but your private key should only be known by you.

What is a signature?

A private key also allows you to do one more importaint thing, it allows you to create a "digital signature." This signature is impossible to forge, hack, or destroy, and makes sure that things only happen with "YOUR PERMISSION" If the internet were written today using the blockchain, companies wouldn't be able to steal your data, withhold access to your funds, or take advantage of you because your "digital signature" makes sure that you are in control. Just like you would sign a contract, you can sign off on who can have access to your funds, and data, and noone can get around this without your consent.

Using these to empower yourself

Although these might seem like complicated concepts, owning your private keys is based around the concept of freedom, independence, and control of your own destiny. In a future based around private keys, nothing in the digital world can happen without your consent, which is a far cry from the financial, and internet systems of today.