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Private keys or secret keys are defined as a string of characters used with an algorithm to both encrypt and decrypt code.
The primary application of this alphanumeric key is designed to send or access cryptocurrency securely.
As its name suggests, secret keys are only shared with the key’s generator, helping provide a layer of security against hackings or theft.
Private keys are stored in digital wallets. When a cryptocurrency transaction is initiated, the wallet generates a digital signature using the private key.
This ensures that a transaction is valid, because the only way to send a transaction is to use a legitimate digital signature.
In essence, the entity or individual in charge of a cryptocoin’s private key is the effective owner of that coin.
If a user permanently loses access to their private key, they permanently lose access to their funds.
Private Keys Explained
Private key encryption is referred to as symmetric encryption. As such, the same private key is used for both encryption and decryption purposes.
A private key is complex by nature and therefore composed of long, randomly generated number that cannot easily be replicated or guessed. Since only one key is involved, the process is fast and simple.
Private keys can be stored in hot (internet-connected) wallets or cold (non-internet-connected) wallets, or printed on paper.
However, private keys must be entered into an internet-connected device in order to send a cryptocurrency transaction.
Private keys should be changed frequently to avoid being leaked or stolen. This is the greatest issue associated with such levels of encryption.
Proper measures should be taken to ensure private keys stay out of the wrong hands.