Private keys are just numbers, similar to a password. The difference is that private keys are a lot more important. A private key is what makes your crypto-wallet work. It’s like the lock on your front door: if you lose the key to your front door, you can’t get in.
If someone steals your crypto-key and uses it to spend your crypto, then all access to your crypto is gone and impossible to recover. For example, if you used the wrong crypto-key to buy $5 worth of crypto-coins with your wallet, then all access to those coins will be gone forever.
Private keys are the only thing you should ever store in a computer. They are mathematically generated secrets that let you access your crypto wallet, and they must be kept secret, because if someone steals them, then all access to your crypto is lost forever and impossible to recover.
Private keys are one-time codes that can create unlimited sums of crypto at will. This is like a passcode on a house key that lets you open the door regardless of who owns the house. The only way to get access to your private keys is through an encrypted backup of your private key (called a “seed”) which is stored securely offline and only known by you.
You keep your private key on your phone, or on an encrypted USB drive, or in an encrypted file on Dropbox, or in a safe deposit box, or in some other physical location that no one else knows about.
Private keys are the heart of crypto. They are the single most important thing you need to know about crypto. Anyone who steals your private keys has all access to everything you own. They can’t be recovered and they can’t be spent.
Most people don’t know this, but private keys actually exist in digital form. If you have keys, it means you have a copy of the corresponding public key. It is quite possible for this private key to be stored on a computer or even on a piece of paper, but it’s best to use a crypto-wallet that stores everything in digital form. Because it also means that your private key is never, ever stored remotely – all remote copies are useless and insecure: stolen laptop, stolen USB stick, whatever.
The only safe places for private keys are either on an encrypted hard drive or on an encrypted chip that is embedded in a device like a smartphone or watch – these are called “smart cards” – or in some kind of tamper-proof device like a ring or necklace that you wear yourself.
Private keys look like random strings of characters, but they are actually long numbers. Each private key has a corresponding public key, and both are needed to spend the money in your account.
To get a private key you have to spend the corresponding public key (called signing or signing a message). You can use any computer that can read and write, so there is no need for special security software.
However, because of how difficult it is to find a collision between two numbers, having two keys with the same private key is not enough to spend any crypto-money. You need the correct public key for the correct private key; it’s like having the right bank account number for every possible bank account number.
The only way to keep your funds safe if someone else has your private keys is to keep them secret and safe. If you don’t want to hold your crypto-money on an exchange that may go out of business or be hacked at any moment, you should use a paper wallet
A private key is a secret thing that only you know. It’s the sign of your ownership of your crypto. Private keys are useful because they let you have control over your crypto at all times, without giving anyone else access to it.
Private keys are also useful for giving you access to your crypto even if you don’t already have it. For example, if I give someone my private key, they can give me coins and I will get them. Or they can use my private key to transfer coins from their wallet to mine, which would be a way of saying “I’m going to send you money.” Or in some rare cases, if I generate a new public key, they can deposit money into it.
Private keys are some kind of long, random series of numbers and letters. They’re not necessarily written down anywhere. The wallet stores them, alone and in secret. You can think of private keys as something like a combination to a safe. If the safe is empty and not opened for a long time, even if the combination is remembered exactly, the safe will be useless without the combination. If you lose that combination, even if someone knows it, the safe will still be useless without the key to open it. The private key is the combination.
Private keys are made up of two parts: one that’s easy to remember (your passphrase) and one that’s hard to forget (the private key). Your passphrase should be memorable but easy to remember; this keeps it secure even if you have terrible memory. The private key should be long enough to make it hard to guess but short enough that you won’t forget it by accident. The best length is usually 12 or 24 words.
A private key is a way of translating an integer into the corresponding cryptocurrency address. (For Bitcoin and most altcoins, that’s “a way of converting an integer into a string of letters and numbers.” For Ether, it’s “a way of converting an integer into both a string of letters and numbers and a cryptographic function.”)
The private key is your wallet password. It’s the thing you use to unlock your wallet so you can send money in or out. It’s very important not to lose it. The only reason you should ever let anyone else have access to it is if you want to give them access to some or all of your stored currency.
And yet people make all sorts of mistakes when they create wallets or share their keys with others. Here I’ll describe some common ones and what to do if you make them.