What Is a Public Key and How Does It Work?
What Is a Public Key?
A public key, also known as an "open key," is a cryptographic component that allows you to receive crypto from others. A wallet address can be derived from a public key. It’s an essential part of the cryptographic technology behind cryptocurrencies. Without public keys, it would be impossible to carry out secure transactions or use crypto wallets.
The term "key" originates from the field of encryption. Cryptocurrencies use this technology through a system known as asymmetric cryptography, which uses key pairs. This key pair consists of a private key (secret key) and a public key (open key). Through this technology, crypto transactions can be securely performed on the blockchain.
You can compare a public key to an email address — people can send emails to it, and it’s okay for everyone to see it. The private key is like your password — it gives you access to your emails and only with it can you send messages.
Key Takeaways
- A public key is a public address that allows you to receive crypto.
- They appear as a long string of alphanumeric characters and are generated by cryptographic software.
- Public keys are derived from private keys but cannot be traced back to them.
- These open keys can be safely shared to receive crypto.
How Does a Public Key Work?
Public keys function as receiving addresses for your crypto wallet and play a crucial role in the crypto world. It’s similar to a bank account number, except the public key is much more complex. When creating a crypto wallet, for example for Bitcoin or Ethereum, the wallet automatically generates two cryptographic keys: the public key and the private key. While the public key is simply a key others can use to send you crypto, the private key grants access to your cryptocurrencies.
The public key is not a random address — it is derived from the private key using a complex mathematical algorithm called Elliptic Curve Cryptography (ECC). Because of this system, it’s impossible to reverse-engineer the private key.
Sending crypto works like this: through your wallet, you want to send Bitcoin to a friend. You specify how much BTC to send to their wallet address, using their public key. This transaction is signed with your private key, like a digital signature. The Bitcoin network then verifies this transaction using your public key. If the combination of public key and private key is correct, the transaction is validated and executed.
What Does a Public Key Look Like?
A public key appears as a long string of alphanumeric characters that is generated by cryptographic software. A public key might look like this:
02c1b7e3e6e7af5f3bcd9cf9a58f9f27d7c6a2ab1c0d3b7a7d8e6b2f0c5e9a0a1b
The appearance of public keys can differ across blockchains. Some public keys can be further encrypted into a hashed address — the final wallet address you share with others.
What Is the Difference Between a Public and Private Key in Crypto?
The terms public key and private key are often mentioned together, but there is a major difference between the two.
- Public keys can be shared with others. They are generated to create your wallet address, which allows you to receive crypto.
- Private keys must always be kept secret. They are required to access your crypto wallet and to sign transactions.
| Attribute | Public Key | Private Key |
|---|---|---|
| Visibility | Can be shared with others | Must not be shared with anyone |
| Function | Address to receive crypto and verify transactions | Sign and execute transactions |
| Control | Does not grant access to your crypto wallet | Grants full access to your crypto wallet |
| Risk if lost/leaked | No problem: does not provide wallet access | High risk: possible loss or theft of crypto |
Final thoughts
A public key is an important element in the crypto world. It is your public key that allows you to receive cryptocurrencies. Thanks to complex mathematical algorithms, this key can be safely shared without putting your cryptocurrencies at risk. Public and private keys are linked but not the same. Every crypto trader should understand what a public key and private key are.
