Last updated on January 22nd, 2018 at 09:47 am
What is Bitcoin? Bitcoin is a digital currency and a payment system that was introduced as an open source software by Satoshi Nakamoto who developed it. It utilizes peer to peer technology since money can be transferred from one individual to another directly without the involvement of a central bank. All payments are usually recorded on a public ledger. Individuals using software such as wallet software can get to send and receive bitcoins electronically through a PC, smartphone or web app.
What is a Bitcoin Private Key?
What is a bitcoin private key? Bitcoin private key is a secret number generated to allow individuals to spend their bitcoins. When users are issued with a bitcoin address, they are also issued with a bitcoin private key. It is usually a 256 bit number and since it is the golden ticket that allows an individual to spend his or her bitcoins, it needs to be kept safe and securely.
A private key can be used to accept, sell and donate bitcoin. Many charities are now accepting bitcoins.
How to Keep Bitcoin Private Key Safe?
One of the ways one can keep a bitcoin private key safely is by storing it on their computers in a disk that is encrypted. You can also print it on a piece of paper. This can be accomplished by using pywallet. Pywallet is a utility developed using python that allows users to extract private keys from their wallet files. The extracted files can then be printed on to a small piece of paper using a printer.
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What a Bitcoin Private Key is Used for?
In order to make a transaction, the user should have availability to a tool or program that allows importing of the private key. Some wallets may make a transaction without the need of importing the private key. Others will require the private key to be swept. When private keys pass through the procedure of sweeping, a transaction will be broadcast to another address and which will include the balance.
How to Import a Bitcoin Private Key?
How does one import a bitcoin private key? One of the methods includes the use of blockchain.info. This online tool assists users to import private keys easily. This is achieved through their wallet service which is referred to as a hybrid ewallet. Since it is an online tool, it doesn’t store your wallet information. This is kept on your browser as an encrypted file. You are required to issue your password or alias so as to access your account.
BIPS also allows the importation of private keys easily by simply allowing the user to either type the key manually from the paper wallet or scan it using a QR reader app through a smartphone’s camera. Other bitcoin private key import providers include Mycelium which provides an android app that can be downloaded from Google play. The app allows one to either scan the code from the paper wallet or by use of cold storage.Это интересно:
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Caution, private keys can allow to use funds associated with these addresses. Do not expose the private keys to a situation where they could fall into wrong hands. It is therefore preferable to encrypt the keys and securely erase any hard drive or USB key that contained an unencrypted private key.Another important note, it is important not to use a private key simultaneously with the Bitcoin software and other online wallets. This practice is considered experimental and may cause operational problems with the Bitcoin sofware. If a problem occurs after this mistake, it is be necessary to export the private keys, reinstall Bitcoin and re-import private keys.
- Open your Bitcoin software.
- Click on the menu Help / Debug window (at the top).
- Click on the Console tab.
- If your wallet is encrypted, type the following command followed by the Enter key to unlock the wallet
walletpassphrase (password) 600
- Type the following command to export the key
dumpprivkey (Bitcoin address)
- The private key is shown on the screen.
What is a Bitcoin Private Key How to Use It Keep it Safe .
What if you lost all of your bitcoins tomorrow? What would you do?
Let me stress this point:
“If you don’t own your private key, you don’t own your bitcoins.”
Yes, you read that right.
Even the most knowledgeable man on Bitcoin says:
“The private key must remain secret at all times because revealing it to third parties is equivalent to giving them control over the bitcoins secured by that key. The private key must also be backed up and protected from accidental loss, because if it’s lost it cannot be recovered and the funds secured by it are forever lost, too.”
― Andreas M. Antonopoulos, Mastering Bitcoin: Unlocking Digital Cryptocurrencies
In my earlier guide on Bitcoin wallets, I have used two terms extensively- Private Address (or key) and Public Address (or key). These keys are what make Bitcoin the safest and most widely used cryptocurrency.
To understand private keys and public keys, let us look at an example.
Consider a mailbox where you receive your physical mail.
It has a unique and specific number (an address). If someone has to deliver you a letter, he/she must know your house/flat number to deliver it.
And as the receiver, you have a private address (or key) to unlock the mailbox and collect your belongings.
In real life, do you give your keys to someone unknown?
You always keep track of your key and don’t jeopardize the contents inside of your mailbox.
Similarly, just like your house/flat number, anyone in the Bitcoin world can know your public address (Bitcoin address) to send you bitcoins. And to unlock (spend/send) those bitcoins, you would require your private address (or key) for which you need to take full responsibility, just like the keys of the mailbox.
I feel that understanding the underlying technical aspect of keys is important so that your remain better informed and educated enough to take care of them.
In the next section, I will tell some basic technical aspects of these keys.
What is a Private Address (or key)?
A private key is a secret, alphanumeric password/number used to spend/send your bitcoins to another Bitcoin address. It is a 256-bit long number which is picked randomly as soon as you make a wallet.
The degree of randomness and uniqueness is well defined by cryptographic functions for security purposes.
This is how the Bitcoin private key looks (it always starts with 5):
What is a Public Address (or key)?
This is another alphanumeric address/number which is derived from private keys only by using cryptographic math functions.
It is impossible to reverse engineer and reach the private key from which it was generated.
This is the address used to publicly receive bitcoins.
This how the Bitcoin public address looks (it always starts with 1):
This address is always seen and broadcasted for receiving bitcoins. Users can make as many public addresses as they want to receive bitcoins.
What are Bitcoin private keys used for?
Private keys are used for making irreversible transactions. Yes, irreversible!
They are the key to spending and sending your bitcoins to anyone and anywhere. This irreversibility is guaranteed by mathematical signatures which are linked to each transaction whenever we use the private keys to send bitcoins.
And for each transaction, these signatures are unique, even though they are generated from the same private keys. This feature makes them impossible to copy. The user can confidently use the same private key again and again.
Moreover, the signatures are mathematically related to Bitcoin addresses. This math relation helps in confirming that the signatures are only of that particular account holder who wants to transfer bitcoins.
How do we keep private keys safe?
It is OK if you didn’t understand the above technical stuff.
You can still use Bitcoin as long as you keep your private keys safe.
These digital keys are crucial in the ownership of bitcoins. These keys are not stored on the Bitcoin network but are created and stored by the file/software (a.k.a. wallet).
A wallet stores these keys. There are a lot of types of wallets out there and some allow the private keys to be stored and guarded by the user.
Some keep the key safe on behalf of the user.
I have explored each type of safety measure for you so that you can choose the most effective wallet according to your needs.
Web and Mobile Wallets
Most of the web and mobile wallet software services in the Bitcoin market store your private key on your behalf on their servers.
They get stored in an encrypted form which only you can decrypt.
- Zebpay Bitcoin India
- Zebpay Bitcoin India
In this kind of wallet, your keys are held by someone else, and if that gets hacked or stolen, your bitcoins are gone. That is why you need to take extra safety measures when dealing with these services.
However, there are really great wallets like MyCelium, which I personally use because of its additional security features and compatibility with hardware wallets.
Desktop wallets are relatively safe. In such wallets, once you install them on your desktop, you will get your Bitcoin address and private key in a downloadable and importable file.
These importable keys can be made password protected and stored on a memory stick or hard drive.
But once you lose the file of the private key, you will lose the bitcoins.
I am going to discuss each one of these in detail in upcoming articles.
Here are a few desktop Bitcoin wallets: