Bitcoin Private Keys: Everything You Need To Know

Bitcoin Private Keys.jpg

What if you lost all of your bitcoins tomorrow? What would you do?

Let me stress this point:

“If you don’t own your private key, you don’t own your bitcoins.”

Yes, you read that right.

Even the most knowledgeable man on Bitcoin says:

“The private key must remain secret at all times because revealing it to third parties is equivalent to giving them control over the bitcoins secured by that key. The private key must also be backed up and protected from accidental loss, because if it’s lost it cannot be recovered and the funds secured by it are forever lost, too.”
― 
Andreas M. Antonopoulos, Mastering Bitcoin: Unlocking Digital Cryptocurrencies

In my earlier guide on Bitcoin wallets, I have used two terms extensively- Private Address (or key) and Public Address (or key). These keys are what makes Bitcoin the safest and most widely used cryptocurrency.

To understand private keys and public keys, let us look at an example.

Consider a mailbox where you receive your physical mail.

It has a unique and specific number (an address). If someone has to deliver you a letter, he/she must know your house/flat number to deliver it.

And as the receiver, you have a private address (or key) to unlock the mailbox and collect your belongings.

In real life, do you give your keys to someone unknown?

  • No. Of course not.

You always keep track of your key and don’t jeopardize the contents inside of your mailbox.

Similarly, just like your house/flat number, anyone in the Bitcoin world can know your public address (Bitcoin address) to send you bitcoins. And to unlock (spend/send) those bitcoins, you would require your private address (or key) for which you need to take full responsibility, just like the keys of the mailbox.

I feel that understanding the underlying technical aspect of keys is important so that your remain better informed and educated enough to take care of them.

In the next section, I will tell some basic technical aspects of these keys.

What is Bitcoin Private Key?

A private key is a secret, alphanumeric password/number used to spend/send your bitcoins to another Bitcoin address. It is a 256-bit long number which is picked randomly as soon as you make a wallet.

The degree of randomness and uniqueness is well defined by cryptographic functions for security purposes.

This is how the Bitcoin private key looks (it always starts with 5):

5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF

What is a Public Address (or key)?

This is another alphanumeric address/number which is derived from private keys only by using cryptographic math functions.

It is impossible to reverse engineer and reach the private key from which it was generated.

This is the address used to publicly receive bitcoins.

This how the Bitcoin public address looks (it always starts with 1):

1EHNa6Q4Jz2uvNExL497mE43ikXhwF6kZm

This address is always seen and broadcasted for receiving bitcoins. Users can make as many public addresses as they want to receive bitcoins.

What are Bitcoin private keys used for?

Private keys are used for making irreversible transactions. Yes, irreversible!

They are the key to spending and sending your bitcoins to anyone and anywhere. This irreversibility is guaranteed by mathematical signatures which are linked to each transaction whenever we use the private keys to send bitcoins.

And for each transaction, these signatures are unique, even though they are generated from the same private keys. This feature makes them impossible to copy. The user can confidently use the same private key again and again.

Moreover, the signatures are mathematically related to Bitcoin addresses. This math relation helps in confirming that the signatures are only of that particular account holder who wants to transfer bitcoins.

Bitcoin Account

How do we keep private keys safe?

It is OK if you didn’t understand the above technical stuff.

You can still use Bitcoin as long as you keep your private keys safe.

These digital keys are crucial in the ownership of bitcoins. These keys are not stored on the Bitcoin network but are created and stored by the file/software (a.k.a. wallet).

A wallet stores these keys. There are a lot of types of wallets out there and some allow the private keys to be stored and guarded by the user.

Some keep the key safe on behalf of the user.

I have explored each type of safety measure for you so that you can choose the most effective wallet according to your needs.

Web and Mobile Wallets

Most of the web and mobile wallet software services in the Bitcoin market store your private key on your behalf on their servers.

They get stored in an encrypted form which only you can decrypt.

Android Wallets:

iOS Wallets:

In this kind of wallet, your keys are held by someone else, and if that gets hacked or stolen, your bitcoins are gone. That is why you need to take extra safety measures when dealing with these services.

Desktop Wallets

Desktop wallets are relatively safe. In such wallets, once you install them on your desktop, you will get your Bitcoin address and private key in a downloadable and importable file.

These importable keys can be made password protected and stored on a memory stick or hard drive.

But once you lose the file of the private key, you will lose the bitcoins.

I am going to discuss each one of these in detail in upcoming articles.

  • Exodus
  • Atomic
  • Electrum
  • Guarda

Here are a few desktop Bitcoin wallets:

Bitcoin Desktop Wallets
Bitcoin Desktop Wallets

Hardware Wallets

Hardware wallets are basically an electronic invention made to store your private keys offline away from the vulnerable online environment so that they can’t be hacked.

Some hardware wallets come with security grid cards similar to some debit cards in order to verify the transaction. Some even have a little digital screen to verify your transactions.

They are tamper proof and come with a limited user interface. In case your device is destroyed, as long as you have a backup code, you can retrieve your keys and bitcoins. 

Some of the popular hardware wallets are:

Trezor

Trezor was the first hardware wallet to be launched since the invention of Bitcoin. It is a small device which can be connected via a USB cable to your personal computer. Its fundamental purpose is to store the private keys offline and sign transactions.

Ledger Nano S

Ledger Nano S can be used even on a computer that is infected with malware. It has two buttons which are needed to be pressed together to sign and confirm a transaction, making impossible for a hacker to use.

Ledger Nano S also requires the user to create a PIN code on setup. The PIN code helps prevent the loss of bitcoins in case your Nano S gets lost.

It supports Bitcoin, Ethereum, and other popular altcoins, and connects with other software wallets like MyCelium. Here are few videos to learn more about Ledger Nano S:

Paper Wallets (Cold Storage)

Paper wallets are simply Bitcoin private keys printed on a piece of paper. It can have the Bitcoin public address also printed on it, but not necessarily. Paper wallets are an effective way of storing Bitcoin private keys offline.

They protect the user against potential theft or mishap with the desktop or mobile devices.

These kinds of wallets are also called “cold storage” because the keys are generated offline and never stored online or on a computer.

You can make your paper wallet from bitaddress.org, which is an HTML page specifically for this purpose only.

You can save the HTML page offline and remain disconnected from the internet to generate the keys. They can be printed on paper or stored as a soft copy on a USB or hard drive. Read my previous guide on how to make a Bitcoin paper wallet.

Bitcoin Paper Wallet
Bitcoin Paper Wallet

Conclusion

In a Bitcoin wallet, the most important thing is your private key because it will prove that the bitcoins you claim as your own are actually yours.

In upcoming posts, I will cover how to set up a wallet for each type (Mobile/Desktop/Hardware/Paper) and how to save/import your private keys.

How are you keeping your private keys safe? Let us know what you do in the comments below!! Have a question about Bitcoin Private keys? Feel free to ask in the comment section below.

Happy reading, learning, and sharing with the coinsutra.community!

Here are a few more Bitcoin wallet related guides that you must read next:

182 thoughts on “Bitcoin Private Keys: Everything You Need To Know”

  1. I heard that obtaining the private key means taking ownership of the bitcoins. How to do this practically? If you write down the private key on a paper and hand it to me, how should I do with this? and if more than 1 person get this paper at the same time who would be the owner?
    Thankyou!

    1. Put these keys in a wallet to claim your btc. Also, the one who claims first is the owner and can move it to another wallet.

      1. Thank you for quick answering. Seems I couldn’t find a way to “put these keys in a wallet”. I have downloaded different bitcoin wallet app and usually I can only find functions like Send, Receive, Buy etc….and for “Receive” it is only about sending the public key to someone else.
        Did I miss anything?

  2. your explanation of the asymmetric encryption method that allows users to verify ownership actually isn’t at all technical, but purely metaphorical. One would have to study and understand elliptic curve theory and math to appreciate the difficulty of the problem someone wanting to steal your bitcoin would need to solve. Other cryptocurrencies use elliptic curve, too, which has been around about 30 years now.(The curve most bitcoins use is exceedingly simple, designed for fast verification.) Also, cryptocurrencies have zero intrinsic value as an investment, and so rely strictly and totally on what’s called a “greater fool” strategy.

  3. I have a paper wallet, which I photocopied as a backup, the lost the original. The photocopy QR code for private key was wrinkled and didn’t scan, so utilized the alpha numeric key. Had trouble getting the alpha numeric key to take in blockhain.org wallet, then got it to be accepted in another wallet, which it has been pending for 4 days now. How would I know if the alpha numeric code was accurate? Would it reject the code immediately if it wasn’t accurate?

    1. If it wasn’t accurate it will reject automatically. Moreover, there are several formats of the private keys so which one are you using I don’t know. Some more inputs like formats will help in analyzing.

  4. Please help me..my email got hacked and i don’t know how to recover my private key..I have all other details but how do i get back my private key

  5. I’ll leave the reply to Sudhir 🙂
    But, my friend, the best thing you can do is note it on paper, have a notebook for this only. Private keys must be kept offline, and out of your computer.
    Wish you can retrieve yours…

  6. I have a money coming to me for investments. They put it in my account but I can do anything with the it. Then it disappears. They told me I need to buy a private key in order to receive the money. Is that true and how do I get one so I can receive the money. They told me it would cost $2000 for one.

    1. Probably someone is scamming you. Private keys are not bought and sold. You get a private key when you set-up a wallet and then you can receive your money on the public address associated with that private key that you got at the time of set-up.

  7. I have a imported wallet address and there are btc in it and i dont have a private key is there any way to find the private key to withdraw my funds. This is a blockchain account

  8. The more I read here, the more I wonder about cryptos. If there were a way to figure out a private key from the public address, I’d spend every bitcoin out there.

    But which brings to mind a question I’ve been mulling over. Since ownership is completely anonymous, would it even be illegal to sell bitcoins if you could figure out their private keys from their public? I’m thinking not.

  9. Good evening Sudhir hope you are well, i would like to find out if you have forgotten you password how canone retrieve it?

      1. Some 1 put his btc at watch in my account and said he send the btc to me what can I do to the btc without a key cause he is refusing with it cause I payed him.

  10. Hello there.. i want to ask if the watch only bitcoin they send in my imported address wallet can be withdrawn or remove there without logging in my wallet if they have the private keys?

  11. Dear Sudhir,
    First Sorry for my english.
    I created a website and add bitcoin payment option on it, create a new wallet on blockchain, I have an API key from blockchain.info and xpub key, but for the transaction I need a “bitcoin Secret key”. I just want to know that, every key have is own private key, so if i extract the private or secret key and add in site admin panel so its works for all. I am confused,
    also, if I added any public address(like. 1EHNa6Q4Jz2uvNExL497mE43ikXhwF6kZm) in Imported address, its not synchronized(its new address), continue in reading option from last 02 days. and there is no option for private key in “More Option”

    Can u pls. guide.

  12. If I didn’t have a scanner for that grid you get when making a paper wallet, is it ok as long as you just have the private and public keys or could I take a photo of it ?

  13. I want to get into crypto currency but I haven’t much money to start could I start with 2 Litecoin and trade with that ? Or wouldn’t they expect such a low amount.

  14. Great knowledge Sudhir! I use Mycelium on my mobile. I have a Trezor linked account (a lock appears next to it) where I keep nearly all my bitcoins. Along with the string of 24 words on paper to access. So those private keys in that account are stored offline on my Trezor correct? I’m safe as can be? I hope that isn’t too confusing of a question

  15. How can I keep the note of passwords like this 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF. Thanks a lot

  16. Hi Sudhir, great article thank you. I had my bitcoin in a Multibit wallet and this is no longer supported. I’ve been able to export my private key next, but I’m wondering what to do next to import it somewhere useable (such as Blockchain). Do you have any suggestions on what I should do next?

    1. @Quaetapo Thats right. You can import it to Blockchain or any other wallet that supports importing of the private key.

  17. Since proof-of-work difficulty is set so that one blockchain block is mined only every ten minutes, and a block can only hold 2000 transactions, doesn’t this limit the network to about 4 transactions per second? Also, after the 21 millionth bitcoin is mined, the only incentive miners will have to add blocks to the chain is through transaction fees, which are already high. Not clear how bitcoin has a future?

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