Whether learning about Bitcoin specifically or any other cryptocurrency such as Ethereum, Dogecoin, Cardano, or Solana, the subject of your private keys will inevitably come up. Your cryptocurrency wallet has both public and private keys that allow it to function.
The reality is that you’ll likely never really see your private key, or need to see it. Instead, you’ll see your recovery phrase and your public address, which are required for recovering your wallet and receiving funds, respectively. So what’s your private key and why do you need it? We’ll cover all that and more in this guide. Let’s start by parsing out public keys and recovery phrases first.
What is a Public Key?
Your public key, or public address, is the string of alphanumeric characters used to receive funds. It is also sometimes called a receiving address. Regardless of the terminology, the concept of a public key is similar to an email address or handle used to receive funds when someone wants to e-Transfer or Cash App you some money. You give them your email or handle, they add it to their app, and then they can send you money. A public key is the same thing; people can use it to send funds to that address.
A public key can also be used to see someone’s wallet balances and transaction history when pasted into a block explorer. However, that is why many blockchain networks, including Bitcoin, give you a new receiving address every time you want to receive funds. While your public key can in no way compromise your account in terms of allowing someone to gain access to your funds, it can certainly be used as a way to monitor a wallet’s activity and it reduces anonymity. Even though it is a new address, it’s still connected to your account and under your control with the same set of private keys (more on this later).
That said, you can, if you choose, keep using the same receiving address/public key to receive funds, as it’s really a matter of personal preference and desire for anonymity. This is often done if you’ve whitelisted a withdrawal address with a centralized exchange, as it makes subsequent withdrawals a faster process. However, if you’re receiving funds from a person you don’t know, you may want to use a newly generated one to help protect your identity and hide your balances.
What is a Recovery Phrase?
A recovery phrase, or secret phrase, is a set of 12 or 24 words given to you when you create a new crypto wallet. This is regardless of whether it’s a hardware or software wallet. This phrase’s only purpose is to recover your wallet whether because you lost your device, or simply because you got a new one. You’re essentially able to import your wallet onto any new device and gain access to your funds on it by using your recovery phrase.
This is why it is extremely important to keep your recovery phrase safe and only accessible to you, as anyone who has it could use it to import your wallet on their own device and take your funds, much like if you gave them your private keys.
What Are Private Keys?
Private keys are essentially your proof of ownership over a wallet and its balances. They’re used to sign and approve transactions, like your signature or PIN with a bank card. Rather than having to enter your private key to approve a transaction, you’ll likely enter a spending password which you create when you set up your wallet. Your wallet will then use your private keys to sign the transaction in the background, keeping them safe.
Importantly, private keys cannot be figured out by knowing someone’s public key thanks to a security measure that’s often referred to as a “trapdoor” function. These are one-way mathematical functions that are easy to solve in one way, but almost impossible to crack in the reverse (you’d need a supercomputer that doesn’t exist yet), meaning you can’t take someone’s public key and figure out their private one. It also helps that private keys are exponentially longer than public keys, often being 256 characters long. Public addresses are 26-35 characters.
Private keys underlie every public address associated with a wallet. As mentioned in the public key section, your wallet may give you a new receiving address every time you go to receive funds. All those receiving addresses are generated using your private keys, therefore allowing them all to be accessed with the same private keys. The balances of all the addresses are automatically totaled when you view your account. All of these things are done automatically by your wallet’s code, so there’s no need to worry about keeping everything straight yourself.
Where Do You Find Your Private Key?
Technically, your private keys are stored in your wallet, though they are intentionally difficult to access because you can compromise your whole account if you accidentally leak them to someone. Your cryptocurrency wallet will automatically manage your private keys and use them to sign transactions when you enter something like a spending password, which is essentially used in lieu of you having to enter your private key. There’s really no reason why you would ever need to access your private key or tell anyone what it is.
Private keys would also be exceptionally hard to use. For instance if you had to physically enter your private key you would be entering 256+ characters and if just one character is wrong, than you might lose access to you Bitcoin.
What Happens if You Give Someone Your Private Key?
Giving someone your private key is like giving them your bank card and PIN. They can simply take your funds if you do. This is why it’s hard to find your private key, because should a bad actor post as an authority figure ask for your private key to “help” you with an issue you’re having, it’s hard to find. Then, in trying to find where to find it, you’d likely find information saying not to give it to anyone for any reason. It’s sort of a failsafe, though as aforementioned you need to keep your recovery phrase just as safe as your private key.
What’s the Difference Between a Private Key and Recovery Phrase?
Your recovery phrase is ostensibly an encoded version of your private keys as they give you access to your funds and prove ownership like private keys.
They’re different in the sense that your recovery phrase is a set of words and your private keys are a long string of characters. However, giving someone either your recovery phrase or private keys is akin to giving them your Social Security number and all your personal information for all your bank accounts. They’ll steal all your funds in short order.