One of the first things that cryptocurrency beginners hear is the phrase "not your keys, not your coins" but what are cryptocurrency keys anyway? In less than two minutes, I'll teach you the basics of what cryptocurrency "keys" are and how they work.
Cryptocurrency isn't a physical object, so we can't simply hand a Bitcoin to someone. Rather, cryptocurrencies exist as electronic entries on a digital database; in order to transfer value between users on the blockchain, we need to know two things.
1st. We need to know where we are sending the funds
2nd. We need a way of making sure that only the right people can sends funds from the accounts that they actually own.
Both of those functions are made possible by a combination of public and private keys. The public key (sometimes called an address) is like your mailing address. Anyone who has your public address can mail you a package or letter. Likewise, you can post your public address wherever you like, and people can use this to send you cryptocurrency, but they CAN'T use your public address to take your money from your account.
The private key is like the key that you use to get in your house. Whereas anyone can send you mail (or crypto) through your public address, if you want to get into the account and take something out, you will need the private key. The private key allows you to send funds to other people while also making it very difficult for someone to access your funds simply by guessing your password.
However, simply holding a private or public key isn't enough. Most public/private keys are a long string of characters that aren't usable by humans. Take this Ethereum public key 0x49B2bFd6f951689e5dAe0C63C21532d673D66844 as an example . Moreover, simply holding a public key isn't enough to move funds on the blockchain. In order to actually use the public and private keys simply, developers have created cryptocurrency "wallets" which are software programs that manage your public and private keys and provide a simple "human-friendly" way to interact with the blockchain.
What are wallets and how do they work? Check back in the next article where I will explain the basics of cryptocurrency wallets in less than two minutes.
Management if private keys violates all IT requirements existed before. First IT rule for any software is 'do not write down you password on a paper'. Blockchain rules are obviously 100% opposite. One may argue blockchain is not safe , neither secure in its design?