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Bitcoin Transaction Private Key

By Admin | Bitcoin News

May 14

Bitcoin transactions and the private key

Bitcoin transactions are carried out through Bitcoin wallets. Bitcoin wallets are authorized by a public address and a private key for sending and receiving Bitcoins from the Bitcoin wallets. Private keys play a vital role in Bitcoin transactions. There are different types of Bitcoin wallets based on characteristics and functionalities, but all Bitcoin wallets have a private key for authenticating transactions. Bitcoin is secured through digital message signatures created with a unique private key. Bitcoin transactions are carried out using the public address and the private key, and the private key allows users to identify each other when a Bitcoin transaction is carried out.

The role of public and private keys in Bitcoin transactions –

The public and private keys in a Bitcoin wallet are mathematically linked through a signature algorithm.

  • The public key or the public address is used to identify a sender or a recipient. Just like the email address, the public key can be distributed to others for identity purpose.
  • On the other hand, the private key is used together with the public key to create a non forgeable message signature.

The private key is highly important and should be kept as a secret unlike the public key which can be distributed to others. The private key requires a lot of security measures as it is the underlying base for Bitcoin transactions.

Bitcoin transactions and the private key

Bitcoin transactions and the private key – all you need to know!

The knowledge of private key is the only requirement for one to conduct Bitcoin transactions; hence private keys should be kept a secret. Features of private keys include –

  • Private keys are just a number between 1 and about 10 selected from a very large range.
  • Private keys play a fundamental role in securing the Bitcoin network.
  • Private keys are nothing but a digital signature that prevents forgery in Bitcoin transactions.
  • Public addresses are derived from public keys which are in turn derived from private keys
  • Bitcoin transactions are nothing but messages signed with a private key.
Different Formats of the Bitcoin Private Key –

Bitcoins can be easily stolen from a Bitcoin wallet if the private key is easy to guess or in cases when the private key is lost or stolen. Hence it is highly important to choose a secure private key that is hard to crack by a third party. Private keys are generated in different formats that come with encryption and decryption mechanisms.

  • Basic format private key –

A very basic format example of a private key –

basic format example of a private key

The basic format private key is derived from a 256-bit number that can be represented in many ways. It can be in the range of 0-9 or A to F or any 32, 64 or 256 hexadecimal bits.

  • HD wallet format private keys –

Hierarchical deterministic wallets use the BIP 32 seed to generate private keys. The HD wallet consist of a master extended key that consist of a 56-bit private key and a 256-bit chain code, for 512 bits in total.

  • Wallet Import format private keys –

An alternative format for private keys is the wallet import format (WIF). The Wallet import format is the most common way to represent private keys in Bitcoins. The wallet import format private keys begin with the number 5 and are followed by a sequence of letters and numbers. Example of a WIF private key –

 Example of a WIF private key

  • The mini private key format –

Some Bitcoin wallets use the mini Bitcoin private key format. This format is not so common with Bitcoin wallets, but is used in cases where the space is less or with physical Bitcoins. The mini private key is a key associated to the private key of the Bitcoin wallet. Example of mini private key format –

Example of mini private key format

Bitcoins can be spent only once and when they are spent using the private key, the private key becomes worthless. Private keys play a very fundamental role in Bitcoin transactions. Hence one is required to take every possible step to keep the private key safe and secure. One should use the format of the Bitcoin that is the most safe and secure.

 

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