Private Key
AdvancedA private key is a secret code, usually a long string of numbers and letters, that proves ownership of cryptocurrency or other blockchain assets and allows the owner to authorise transactions.
Blockchain systems use public-key cryptography. Each user has a pair of keys. The public key, or an address derived from it, can be shared openly, like an account number, so others can send assets to it. The private key must be kept secret, because anyone who has it can spend the assets.
When a user sends cryptocurrency, their wallet uses the private key to create a digital signature, proving the transaction is authorised without revealing the key itself.
For example, if someone stores their private key on a piece of paper and loses it, they may permanently lose access to their cryptocurrency. If a hacker steals it, they can transfer the assets away, and the transaction usually cannot be reversed.
Wallets often generate a recovery phrase, a list of words that can restore the private key. Users can keep keys themselves, which gives full control but full responsibility, or rely on a custodian such as an exchange, which is convenient but depends on the custodian's security and solvency.
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