Public Key

Public Key

The Public Key is a critical part of the cryptographic system used in cryptocurrency transactions. It serves as a receiver's address in the digital transaction system, essentially where the funds are sent.

Creation of a Public Key

Public keys are created from private keys using a set of mathematical operations known as Elliptic Curve Cryptography (ECC). A private key is a secret number that someone uses to encrypt and decrypt information. When this private key undergoes ECC, it generates the corresponding public key.

Difference Between a Private Key and a Public Key

  • Private Key: This is a secret key that only the owner knows. It's used to sign digital transactions, lending them validity. If someone else gains access to your private key, they have total control over your funds. So it's vitally important to keep this secure.
  • Public Key: On the other hand, a public key is derived from your private key, but it can be shared openly. People need your public key to send funds to your account. You can't derive the private key from a public key, keeping your account secure.

Function of Public Key in Transactions

The relationship between a public key and private key underpins the operation of a cryptocurrency transaction. When cryptocurrency is sent, the sender signs off the transaction by combining the public key and their private key. As a result, a unique digital signature is created. The community can verify these transactions, ensuring the right individual made each transaction.

Benefits of Using Public Key Cryptography

  • Security: Public Key Cryptography is secure because while the public key is known to everyone, the private key remains a secret. Even if a third party has access to the public key, they still can't compute the corresponding private key.
  • Authentication: The Public Key also provides authentication. The system verifies that the transaction was truly sent from the person claiming to do so, as only they hold the private key that corresponds with the given public key.
  • Non-Repudiation: Once you perform a transaction using your private key, you can't deny the fact that you initiated it. Hence, it ensures non-repudiation.