Bitcoin, along with all other notable cryptocurrencies that followed, is built on public-key cryptography. This is a cryptographic system that uses sets of keys: public keys, which are publicly known as well as crucial for identification, and private keys, which are kept secret and are applied for authentication and encryption.
Leading cryptocurrencies such as Bitcoin, Ethereum, and Bitcoin Cash function apply three essential pieces of information: the address which is connected with a balance and used for sending and receiving funds, as well as the address’ matching public and private keys. Generating a cryptocurrency address starts with the generation of a private key. From there, its corresponding public key can be obtained using a publicly known algorithm. The address, which can be utilized in purchases, is a shorter, representative form of the public key.
The private key is what grants a cryptocurrency holder ownership of the funds on a provided address. The Blockchain wallet creates and stores private keys for you. When you send cryptocurrency from a Blockchain wallet, the software authorizes the purchase with your private key (without disclosing it). This authorization tells the whole network that you have the authority to move the funds on the address you’re sending out from.
This system’s security comes from the one-way street that is obtaining from the private key to the public address. It is not possible to derive the public key from the address. It is also impossible to obtain the private key from the public key.