Private Keys vs Public Keys: Understanding the Key Differences

You may have heard the phrase “not your keys, not your coins.” In the crypto world, this phrase refers to self-custodying your crypto by taking ahold of your private keys, so that you have total control over your assets.

In this guide, we’ll explain what exactly private and public keys are and how you can use the OKX Wallet to securely control your keys and hold your assets.

TL;DR

• Sign transactions: Private keys allow you to sign and verify transactions. By holding your own private keys securely, no other entity or person can make transactions without your permission.
• Seed phrases: Seed phrases represent private keys in a human-readable 12-24 word randomly generated phrase. This makes it easier to memorize, secure, and restore your private keys.
• Receive crypto: Wallets create new receiving addresses hashed from your public keys so that you can transact crypto privately.
• Import your wallet: By holding your own crypto in a self-custody wallet, you can import your wallet to any device with a seed phrase or private key.

How do cryptographic keys work?

For all cryptocurrencies, there exists a public and private address pairing:

• Public addresses allow anyone to deposit coins or tokens to the public address, and can also be used to generate additional receiving addresses.
• Private keys allow those with access to the private keys to withdraw assets and sign transactions.

To draw an analogy, addresses are like locked mailboxes which anyone may drop a letter into, while private keys allow owners to unlock the mailboxes.

What are private keys?

Explained simply, private keys are like complex, randomly generated passwords that allow you to access your crypto. Anyone who knows your private keys has access to all your assets and tokens — including the ability to sign and execute transactions.

To keep your crypto safe, it is crucial to protect your private keys. Here’s an example of what a private key may look like:

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It seems almost impossible to memorize, doesn’t it? It’s not generally recommended to keep your private keys saved online so private keys either need to be encrypted or represented in a human readable format. That’s where seed phrases come in.

What are seed phrases?

Seed phrases are your private keys represented in human readable format. Commonly, these will be 12-24 randomly generated words from an approved list. When you create a new wallet, your seed phrase may look something like this:

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On the OKX Wallet, we’ll ask you to verify your seed phrase to ensure you’ve written it down correctly. It’s important that you don’t take a screenshot or keep your seed phrase stored online, so that you reduce the chance of someone else accessing your seed phrase.

What is a passphrase?

Some wallet providers will allow you to add an additional layer of security by letting you enter an optional passphrase at the end of your seed phrase. This passphrase typically supports all alphanumeric and special characters, so you can customize it to be as complex as needed.

With this passphrase, if someone gets ahold of your seed phrases, they won’t be able to access your funds unless they also have access to your passphrase.

As with all good wallet security practices, it’s important to keep this passphrase in a safe place, preferably offline.

What are public keys?

Public keys are created along with private keys when generating a crypto wallet, but do not need the same level of security scrutiny as private keys do. In fact, in Bitcoin’s early days, public keys were often used as receiving addresses.

The blockchain network uses your public key to verify the digital signature you create with your private key when making a transaction. Because of the complex cryptography used, it is easy to verify that a public key responds to the private key signing the transaction. However, it is all but impossible to try and derive a private key from a given public key. This is why it’s important to keep your private keys secure.

For users, you probably won’t need to interact much with your public keys. Today, most cryptocurrency storage solutions use a cryptographic process known as hashing to create multiple receiving addresses from a single public key. It is recommended that you use new receiving addresses for each transaction to help you maintain privacy.

Where are my keys stored?

Thanks to crypto wallets like the OKX Wallet, your keys are created and stored for you. Because private keys are so lengthy, having your private keys held in a wallet makes it easy to sign transactions without actually needing to memorize the private key string. When creating your wallet, you’ll be asked to create a password — this will give you access to your wallet without having to continuously input your seed phrase.

To keep your private keys secure, it is recommended that you write down your seed phrase offline or etch it into metal and keep it somewhere secure.

How do I transfer my private keys to another device?

If you have an existing wallet that you want to transfer to another device — for instance, having your OKX Wallet as both a browser extension and on your mobile device — you can do so by importing your private keys.

The easiest way to do this is by having your seed phrase on hand and importing them into your chosen wallet provider. This way, you only need to import once to view all your assets. Alternatively, you can export your private keys for each cryptocurrency you own.

For a walkthrough on how you can export and import your private keys for the OKX Wallet, read our comprehensive guide to get started.

Ready to take control of your crypto? Download the OKX Wallet today.

THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO PROVIDE ANY INVESTMENT, TAX, OR LEGAL ADVICE, NOR SHOULD IT BE CONSIDERED AN OFFER TO PURCHASE OR SELL OR HOLD DIGITAL ASSETS. DIGITAL ASSET HOLDINGS, INCLUDING STABLECOINS, INVOLVE A HIGH DEGREE OF RISK, CAN FLUCTUATE GREATLY, AND CAN EVEN BECOME WORTHLESS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING OR HOLDING DIGITAL ASSETS IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PLEASE CONSULT YOUR LEGAL/TAX/INVESTMENT PROFESSIONAL FOR QUESTIONS ABOUT YOUR SPECIFIC CIRCUMSTANCES.