APRIL 18
Private Keys
The Secret That Lets You Spend Bitcoin
The Signal
A private key is a secret number that lets you prove you are allowed to spend bitcoin.
The Reading
Imagine you own a special stamp that only you can use. When you press it onto a page, other people can check the mark. They can see that the approval came from your stamp, but they never need to hold the stamp itself. Bitcoin does something similar with mathematics.
A private key is not a metal key. It is a very large secret number. Wallet software can generate private keys and use them when you want to spend bitcoin. The private key creates a digital signature for the transaction. That signature says, in effect, “This spending was authorised.”
Here is the clever part: your private key does not need to be sent across the Bitcoin network. Other computers can check that the signature is valid without being shown the secret number that created it.It is also not a password stored on a central Bitcoin computer. There is no central Bitcoin computer holding a copy for you. If the signature is valid and the transaction follows Bitcoin’s rules, the transaction can be accepted. That is why the word private matters. If someone else gets your private key, they can create valid signatures too and may be able to spend the bitcoin it controls. Your bitcoin is not stored inside the private key. The bitcoin remains recorded on Bitcoin’s shared ledger. The private key gives you the mathematical ability to authorise spending it.
First Principles
A private key is a secret number.
It creates digital signatures that authorise spending.
Bitcoin can check the signature without seeing the private key.
Today’s Challenge
Unlock your phone while someone watches, but hide the PIN as you enter it. They can see that the phone accepted your proof. They still do not know the secret you used.
Bitcoin uses different mathematics, but the lesson is similar: prove you are authorised without giving away the secret. Now imagine that secret controlled money. How carefully would you protect it?
Tomorrow’s Signal
Public Keys