What are Public and Private keys? - Bittr Academy

Bitcoin relies on public key cryptography to create a unique key pair—a public and private key—that controls ownership of Bitcoin. The public key is shared to receive Bitcoin, while the private key is kept secret to sign and spend Bitcoin. This setup ensures that only the true owner can authorize transactions.

How is a Private Key generated?

Private keys are usually generated by a Bitcoin wallet using a secure random number generator. The randomness used to generate a Bitcoin private key comes from a cryptographically secure random number generator that produces a 256-bit number—meaning there are 2²⁵⁶ possible combinations. This level of randomness makes it statistically impossible for two people to generate the same private key.

Using Private Keys in Transactions

Here’s how private keys come into play in a transaction:

Sender Initiates: Bob enters Alice’s receiving address (generated her public key) into his wallet’s recipient field.
Transaction Creation: Bob’s wallet creates and signs the transaction with his private key.
Ownership Transfer: Once accepted by the network, the funds are now accessible only by Alice, who holds the corresponding private key.

Note: Bitcoin wallets store private keys, not actual Bitcoin.

Private Keys and Digital Signatures

Private keys generate digital signatures, which can be verified by anyone with access to the public key. This ensures only the rightful owner (who holds the private key) can spend the Bitcoin.

Storing Your Private Key

Owning Bitcoin means controlling a private key. Losing this key (or the wallet’s seed phrase) means losing access to the Bitcoin associated with it. Security is essential, so choose a secure storage method.

Cold Storage vs. Hot Wallet

Cold Storage: Hardware wallets, like Passport or Bitbox, are ideal for long-term, secure storage. This self-custody solution ensures only you control the private key.
Hot Wallet: Software-based wallets connected to the internet (via mobile or web apps) offer quick access but are less secure than cold storage. Each method has its trade-offs, and the best choice depends on your security needs.

Final Thoughts

Private Key: Used to unlock and send Bitcoin
Ownership: Controlling a private key means controlling the Bitcoin linked to it.
Security: Private keys are large numbers, impossible to guess or replicate.