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What are public and private keys in cryptocurrency?

03/19/2026

Alexey Kuznetsov

What are public and private keys in cryptocurrency?

Imagine an invisible safe containing cash. The safe has a transparent window for storing coins. But the safe can only be opened and the coins retrieved using a secret code. In the world of cryptocurrency, this function is performed by two keys: public and private. Without understanding the system, it's easy to lose your money. Let's break it down in simple terms.

Key Takeaways of the Article

  • A private key is the only way to access your assets. Losing it means the permanent loss of your cryptocurrency.
  • A public key serves as an address for receiving payments and is mathematically linked to the private key.
  • Security is built on asymmetric cryptography: it is impossible to calculate a private key from a public one.
  • Never share your private key or seed phrase with third–party services, even when exchanging coins.
  • To restore access to funds if a device breaks, a master key (seed phrase) is used.

Table of Contents

Public and Private Keys – What They Are in Simple Terms

A private key is a long secret code (numbers and letters). It is what grants the right to spend coins from a specific address.

Whoever holds the cipher is the actual owner of the money.

A public key is a code mathematically linked to the private one, but it only allows for receiving payments.

On the Nadoswap website, when comparing rates and choosing an exchanger, you must provide a wallet address to receive cryptocurrency.

However, an honest service will never request a private key.

How Public and Private Keys Work

Technically, this system is based on asymmetric cryptography. It sounds complicated, but in practice, it is elegantly simple.

When a wallet is created, the program generates two keys at once, linked by a complex mathematical function.

It is important to understand: the private key itself is never transmitted anywhere during this process.

You simply create a digital signature, proving that you possess it.

Private Key: Why It Is Needed and How to Use It

A private key is the heart of cryptocurrency life. It looks like a random set of characters, for example, KxP2gJd7H8fQw3rY9zLmN4cVb6...

Why it is needed:

  • Proof of ownership. Only it proves to the network that specific coins belong to you.
  • Signing transactions. It is impossible to send money without it.
  • Restoring access. With the key, you can access your wallet from any device or program that supports the format.

How to use it in real life: Usually, users do not see the key in its "raw" form. Wallets work with it through an interface.

You simply click the "Send" button, enter the amount and the recipient's address, and the wallet "signs" the transaction with the private key.

What Is a Public Key and How Is It Linked to a Wallet

A public key is the result of complex mathematical transformations of a private key.

This is a one–way function: it is easy to calculate a public key from a private one, but the reverse is practically impossible.

A public key can be shared with anyone. Moreover, the entire transaction history for this address is usually open.

Anyone can visit a blockchain explorer and see how many coins are at a specific address. But who the real owner is remains a mystery.

The Difference Between Public and Private Keys

Beginners often get confused: if both keys are just sets of characters, why can one be shown to everyone while the other must be hidden?

It is simple. A public key is an account number. Like a bank card number: it can be given to anyone for transfers, dictated over the phone, or published on social media.

An attacker who learns a public key can at most see the balance on the blockchain. They cannot steal the money.

A private key is the PIN code for the card. Whoever holds it gains full control over all coins in the wallet: they can send them anywhere, and you will not be able to do anything about it.

The public key works like a receiver: it only receives money.

The private key works like a transmitter: it creates a digital signature confirming that you authorize the coins to be sent further.

How to Create and Store a Private Key Safely

The most reliable way is to generate the key in offline mode.

  • How to create. When installing any official wallet, the program will offer to generate a new storage. At that moment, it will create a random combination and show a seed phrase. This is the master key.
  • How to store. The golden rule: Never share your seed phrase.

How to Restore a Wallet Using a Private Key

Imagine your phone drowned, burned, or broke. In a traditional bank, you go to a branch with a passport.

In the crypto world, the "passport" is the private key or seed phrase.

The restoration process:

  1. Select the option "Log in with a seed phrase" or "Import private key".
  2. Enter the 12 words (or the long key).
  3. The wallet will recalculate all public addresses and display the balance.

Important: Entering a seed phrase into any application makes the wallet vulnerable. Ensure you have downloaded the official app, not a phishing fake. Scammers often create clone apps that steal the phrase upon entry.

Public and Private Keys in Bitcoin and Other Cryptocurrencies

The principle of how keys work is the same for 99% of cryptocurrencies, but there are nuances:

  • Bitcoin (BTC). Uses elliptic curve cryptography (secp256k1). The private key is the basis for creating the public key, which is then used to create an address starting with 1, 3, or bc1.
  • Ethereum (ETH) and all ERC–20 tokens. A corresponding public code is formed based on the private key, but the wallet address consists of the last 20 bytes of the hash of the public key.
  • Addresses usually start with 0x.
  • Ripple (XRP). Similarly, but there is an additional "Destination Tag," which is sometimes confused with a key but is actually just a payment identifier.

Regardless of the coin, a private key for one currency could theoretically work for another if they use the same algorithm.

The Role of Cryptographic Keys in Protecting Your Assets

The entire security of cryptocurrencies rests on two pillars: cryptography and user responsibility.

Cryptography makes "outside" hacking impossible. To crack a private key by brute force, all the world's computers would have to work for trillions of years.

Mathematics is on your side here.

In 90% of cases, hacking occurs because the user gave away the key themselves (fell for a phishing site), stored it in the cloud, or their computer was infected with a stealer virus.

Public keys allow for the verification of signatures. When you send a transaction, the network checks: "Does the signature created by the private key match this public key?

If so, the sender is the real owner."

Summary: Why It Is Important to Understand How Crypto Keys Work

Cryptocurrency is not just numbers on a screen, but mathematical property protected by a pair of keys. Remember the main points:

  • A public key can be shown to everyone.
  • A private key (seed phrase) must never be shown to anyone.
  • Services like Nadoswap help exchange cryptocurrency safely and profitably, but the responsibility for keeping passwords safe lies solely with the user.

FAQ

1. What happens if I lose the private key to a Bitcoin wallet?

You will lose access to your Bitcoins forever. There is no support service, no "forgot password – click here" in the blockchain. The coins will remain at the address forever, but you will not be able to spend them.

2. Can I restore access to a wallet via a public key?

No, it is impossible. The public key and address are one–way derivatives of the private key. Knowing the address, it is impossible to calculate the private key, just as it is impossible to learn a bank card's PIN code from its number.

3. Can cryptocurrency be stolen if an attacker finds out the public key?

No, coins cannot be stolen by knowing only the public key. The most an attacker can do is monitor the balance and history of your transactions.

4. If I forget the password for the wallet (program), is that equivalent to losing the private key?

No, these are different things. The password for the wallet program protects access to the program on a specific device. If you forget it but have the seed phrase, you can simply restore the wallet again. If you forgot the password and lost the seed phrase – then yes, access to the money is lost.

5. Does one private key equal one address or many?

In modern wallets, millions of key pairs are generated from a single seed phrase. Therefore, one phrase can restore hundreds of addresses.

6. What is a "seed phrase" and why is it needed if there is a private key?

A seed phrase (mnemonic phrase) is a "human–readable" representation of your main private key. It is easier to write down than a random set of characters.

Public and private keys are the foundation of cryptocurrency security: the first is for receiving funds, the second is for controlling them. Understanding their differences helps protect assets and avoid losses.