Imagine you have a padlock with two keys: one is the public key, which you can share with anyone, because it will only serve to close the padlock. The other key is the private one, which only you will know and is the only one that can open the padlock once it has been closed.
Thus, if a person wants to make a transaction to you, they “close” it with your public key, but only you will be able to “open” it and have access to it with your private key. This is how asymmetric cryptography is explained.
The key pair in this type of cryptography is mathematically connected. According to Coinbase, everyone can encrypt messages with a public key, but decrypting a message is an exclusive task for the private key.
What does asymmetric cryptography consist of? The key to your security
There is another key example, and that is the use of your email: the public key would be like your email address, and you could freely share it with whoever you want, so they can send you information or whatever they like. As for the private key, that belongs only to you and is what you need to open the mailbox and see everything they have sent you. This beautiful marriage is the basis for the absolute control of your funds. You have the power to authorize transactions with your private key. Only you and no one else. The control of your digital money does not depend on anyone else but you!
What is it really for? Practical applications in the day-to-day crypto
Every time you send cryptocurrencies, you make use of asymmetric cryptography. When sending Bitcoin or Ethereum, you use the recipient’s public key to lock the funds and that person uses their private key to unlock them.
Likewise, you make use of your own private key to sign the transaction digitally, basically. This is the way to prove that you are the owner of the funds and that you have given authorization for said operation.
According to IBM, it is a well-nourished system that makes it possible for millions of people to make their transactions very securely and without cheating, without requiring any intermediary.
Without a doubt, cryptography has gone beyond simply sending money. This technology is the basis of smart contracts. Every time you interact with one, you use your private key as if it were your signature and it is an electronic simile to a legal document.
This is how it is used in blockchain: public keys, private keys, signatures and much more
This technology is the backbone of how money is used digitally. When you create a crypto asset wallet, two keys are generated at the same time: the public key, which is your address to receive money, and the private key, which is the secret key that only you will have to be able to spend it. Only you will be able to control your money!
When you send cryptocurrencies, your signature on the transaction is your private key. This can be verified by everyone with your public key and is what demonstrates that the operation is legitimate and that you are the real owner of the funds.
This is the same principle that is used and extends to smart contracts and other applications on the network, in which asymmetric cryptography, without requiring a central authority or any intermediary, allows “digital signature”.
How do transactions with asymmetric keys work?
The process is very simple:
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To receive funds:
you only have to share your public key (which is your wallet address) and the person who sends you the cryptocurrency will place the transaction with that address, as if it were a letter directly to your mailbox.
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To send funds:
if you plan to spend or invest that money, you and no one else will use your private key to digitally sign the transaction. This key never leaves your device.
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Network verification:
the blockchain network receives the transaction and uses your public key to be able to verify if that signature is authentic.
Advantages and challenges of asymmetric cryptography in blockchain
If something provides security to the blockchain, it is asymmetric cryptography, in addition to giving direct advantages to the user:
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Financial autonomy:
you do not depend on a bank and you are the only one responsible for your funds. Having a private key gives you the power and total control over your digital assets. You will have unprecedented financial freedom. Your crypto, your rules!
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Security and authenticity:
the marriage between public and private keys allows each transaction to have a digital signature and be unique. This allows protection against fraud.
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Decentralization and trust:
no intermediaries are needed in the blockchain to verify transactions, but the cryptographic system itself is responsible for confirming authenticity in each operation.
Although asymmetric cryptography has great benefits, it also has a very great challenge, and that is that all responsibility falls on the user, and the greatest risk is the loss or theft of the private key. If this happens, your funds are lost forever. That’s why here are some recommendations to avoid it:
- Never share your private key with anyone: store it in a safe place, which is not an electronic device connected to the internet.
- Verify the addresses: be sure to check the address of the public key to which you will send crypto assets to avoid inconvenience.
- Use a password manager: they allow you to store your keys securely and protect your funds more efficiently, without the need to have them written on paper.
Frequently asked questions about asymmetric cryptography and blockchain
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What happens if I lose my private key?
Unfortunately, if this happens, you will lose access to your funds forever. There are no banks or government entities or technical support that can help you recover it. That is why it is essential that you store it in a safe, offline place and that no one else knows it.
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Is it possible to hack a wallet with asymmetric cryptography?
Although cryptography is very secure, according to Cointelegraph, your wallet’s private key can be vulnerable if you do not protect it properly. A “hack” would be a theft of your private key, in this case, rather than an attack on cryptography. That is why you must be attentive to viruses, phishing or bad storage practices.
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What is the difference with symmetric cryptography?
The difference lies in the number of keys. In symmetric cryptography, a single key is used to encode and decode the information. In asymmetric, two are used: the public and the private. This is what allows security in an environment like the blockchain.
Conclusion: Your keys, your power in the blockchain
The path to true financial autonomy begins with understanding asymmetric cryptography. It is not just technology, it is pure control. When you understand that your keys are your superpower, you empower yourself to manage your digital assets without having to depend on anyone. Who needs a bank when you have mathematics on your side?
At Bitnovo, we believe in a future where you are the boss of your money. That is why we give you all the tools so that you can learn, operate and protect your cryptocurrencies so easily that even your grandmother could do it (if she wanted to).
Take control! Learn and protect your keys. Discover Bitnovo and keep your crypto safe in just 3 minutes.
