Wallets
You can think of your Bitcoin wallet like the wallet you keep in your back pocket or in a purse, but I like to think of it more as a vault. Yes, it is virtual, it may not be in your pocket, but it can be on your phone. This wallet is where you store your Bitcoin.
Your wallet has keys. Your public key is like your address to receive crypto, while your private key is like your PIN, authorizing transactions. These wallets are tools that enable users to access and manage their cryptocurrency holdings on the blockchain by securely storing their private keys. The wallet helps link you and the ledger, or blockchain, which houses all of the crypto transactions.
A regular wallet holds your money while a cryptocurrency wallet does not ‘store’ your coins. The most important concept of bitcoin is storage, and your wallet safely stores the private keys that function as your blockchain-based digital signature.
Think of your wallet as a bank. You have a bank account number. No one can get into your account (except the bank and gov’t. etc.) but for this example it’s your account. This account number can be associated to your public key. No one can get into your bank account unless they have the pin, correct? The private key is like your bank pin. No one knows
You can receive cryptocurrency at this address from anybody. However, the only thing that may approve any withdrawals or transfers is your private key, which is the same as your PIN.
Furthermore, be informed that cryptocurrency wallets do more than just protecting your digital assets; they enable you to engage in a variety of interactions with the blockchain ecosystem.
Your public key (address) is where anyone may send you cryptocurrency. You can publish your public address, give it to friends and tell them to fund you for various things. The public key is like your wallet being opened and grandma puts in a bitcoin for your birthday. Anyone can add something to it, but they are unable to access items that are already inside.
Empowering you to secure your digital assets with confidence and ease.
When someone transfers cryptocurrency to your wallet address, they are essentially “locking” those funds with a mathematical puzzle that can only be solved with your private key.
In the cryptocurrency market, consider your private key to be the master key to your digital vault. Consider it as a lengthy string of characters that need to be kept completely confidential. Similar to a bank account PIN, this private key gives you sole authority over the coin linked to its matching public key.
Any transaction you wish to authorize requires the use of the private key. You digitally sign transactions with your private key while sending cryptocurrency. This signature confirms that you are authorized to transfer those funds, serving as cryptographic evidence of ownership. The blockchain network wouldn’t approve the transaction if your private key wasn’t used to sign it.
When making a transaction, the wallet software assembles the recipient’s address, the transaction fee and the amount to be transferred. This transaction is then digitally signed by your wallet using your private key. The transaction data and your private key are used to create a unique code (a signature). This signature and the transaction are sent out to the blockchain network.
The network’s miners validate, or check the transaction to make sure the signature is legitimate, and you have enough funds. The network mathematically confirms that the signature was created with the matching private key by using the public key linked to your sending address. The transaction is added to the blockchain, and the ledger is updated to reflect the transfer of your cryptocurrency when the signature is verified.
Crypto wallet security is crucial when dealing with private keys. Losing your private key results in permanent loss of access to your crypto assets; just like losing the key to a physical safe won’t give you access to your tangible assets
