What are Blockchain Private Keys and Addresses?
Private keys and addresses are the foundation of every blockchain network. In purely cryptographic terminology, every security system requires a public key for location and a private key for private access. Applied to cryptocurrency wallets, the public key is your address, since it gives other users a point of access to send tokens to your wallet. In simple terms, you can think of the pair just like an email account or a bank login; the address is like your username or email address, and the private key is like your password. However, if you want to send the coins within your wallet to another wallet, you will need your private key. This is exactly like an email account; the email address is a point of reference for users on the email network to send mail to, and the password gives you full access to the privileges of the account–chiefly, the ability to draft and send emails to other accounts.
Private Keys, Addresses and Miners
Private keys and addresses are made possible by the contributions that miners make on blockchain networks, as long as the network makes use of a Proof of Work scheme. While Blockchain miners are seen as for-profit contributors that secure transactions over the network through encryption, such as the encryption of a message that sends a token from one address to another, miners also work to secure wallet addresses and private keys. Using the same cryptographic principles they use to encrypt transactions, miners make sure that all wallets receive two long, unique, alphanumeric strings of characters, one for the address and one for the private key.
To break down this complex process, imagine you are a miner on a blockchain network. As you seek to make a profit (or not) for contributing computing power to the network (profit being the potential reward of a newly created token), you run software that solves complicated, virtual puzzles in a guess-and-check method. Once you solve a puzzle, this solution will be used to encrypt a transaction across the network into an immutable block, which will be added to an immutable public ledger (the blockchain). Sometimes, your efforts will be tailored to the peripheries of the blockchain network, where your cryptographic contributions will be used to give new users uniquely encrypted addresses and private keys.
Issues with Private Keys and Addresses
There are two primary issues that come to mind with private keys and addresses. One is that the alphanumeric string representations of private keys and addresses are hard to find on the internet. For example, if you want to access your wallet, you will have to remember your wallet’s address and private key in forms such as “A532128B29C” and “F6432E2353A986.” While this feature of most blockchain networks helps us differentiate users from each other, it severely hampers user access. Imagine just how many users have registered themselves in a blockchain network or have acquired a wallet and have already forgotten their private key information, or even their address! Some blockchain networks allow users to link a domain name to their address so it becomes easier to send crypto to a public address.
Another issue is that, if you keep multiple types of tokens in multiple wallets, it becomes difficult to keep track of the variety of different private keys. Imagine trying to invest in multiple cryptocurrencies only to learn that in order to do so, you must maintain one wallet for each coin. You would then write down the address of each wallet and the corresponding key on a post-it note. You come back to your office the next day only to learn that you mixed up a private key with the wrong address, or that the janitorial service threw away your note since you forgot to write “do not throw away” above the memo. If this is the case, you would instantly lose all of your invested assets on the blockchain, and without recourse.
Addressing these Issues
The issues surrounding private keys and addresses are rather innate and stem straight from the design of the platform. Since the first blockchain was released, newer blockchain networks have posited their own solutions to these issues. Fortunately enough, at Ethos we also have been working to solve these issues upon the release of the Ethos Platform. Ethos simplifies the self-custody experience and allows you to backup and restore your keys in case you lose them. As well with many future features such as live best price seeking, trading and many other features coming in the future.
Ultimately, we seek to eliminate the hassle of maintaining multiple digital assets on multiple platforms and wallets. This implementation is a stepping stone on our path to satisfying Ethos’ core mission statement: to create powerful, accessible tools to users worldwide as we step into a new, digital economy.