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 public and private keys in a Bitcoin wallet are mathematically linked through a signature algorithm.
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.
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 –
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.
A very 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.
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.
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 –
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 –
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.