If you’ve read any of our other content, you may have seen us mention public keys and private keys when talking about Bitcoin and crypto wallets. These terms are common in the blockchain world, but not everyone knows what they are or how they’re different.
The role of private and public keys centers on managing communication between a sender and a receiver. When it comes to the blockchain, a unique cryptographic key is used for encryption and decryption, which is important when you send and receive Bitcoin from your crypto wallet.
So join us as we explore the differences and similarities between public and private keys and their functions in the blockchain market.
Let’s start with public keys. What are they, and how do they work? Public keys are used to encrypt data on the blockchain. While advanced users can create public keys through specific software, they are usually provided by a reliable source - something like a Bitcoin wallet.
Public keys are used to authenticate a signature or encrypt messages. However, the way they’re used with blockchain technology is significantly different from the way private keys are used. While private keys typically work as a single decrypting component, public keys have two functions: encrypting and decrypting data.
These keys use what’s referred to as an asymmetric mechanism. This is an algorithmic mechanism that allows for two different public keys to encrypt and decrypt messages. One key encrypts the message, while the private key is used to decrypt.
You might hear private keys referred to as secret keys, but they’re the same thing. A private key is used to decrypt data sent between two users, but only the correct private key has permission to do so. Think of a private key as a password that consists of numbers and letters.
Usually, when you create your Bitcoin wallet, a random private key is created, establishing a sequence that’s not easy to guess or hack. Private keys are very long, which makes it very difficult for an outside attacker to access the data the keys are protecting.
We’ve established that private keys play a huge part in keeping data secured. However, there’s more to a private key than encryption. The purpose of a private key largely depends on the application in which it’s used.
Private keys offer digital signature confirmation, verification, and authorization. To do so, private keys use encryption to create random key pairs. These pairs secure private keys online in the cloud or in an offline app.
Next, the private keys watch for public keys within the application that match the digital signatures. When this process is finished, the public keys use the private key to decrypt the information. However, keep in mind that only the owner of the private key can decrypt the data with the aid of the public key.
There are plenty of advantages to using private keys to encrypt data. Here are a few reasons to use a Bitcoin wallet that employs private keys:
Private keys are perfect for sending and receiving data because they work so well with the existing blockchain technology. Because of this complementary relationship, private keys are ideal for sending and receiving data in a safe, secure, fast, and convenient method.
Using private keys provides additional features and services that enhance the security of data transactions. This is one of the key reasons private keys are so appealing to encryption.
One last reason to use private keys is the convenience and speed it offers encrypted transactions. Using private keys is significantly quicker than other encryption methods.
Both public and private keys are instrumental in providing encryption for Bitcoin wallets. However, the pair differ in several different ways. Both play significant roles in regard to blockchain technology, but understanding the difference between them is important.
A considerable difference between private keys and public keys is their primary functions. For example, is ideal when it comes to system speed, scalability, and security. On the other hand, public keys are great for load testing. The two work best together on the blockchain, though, as one requires the other to send and receive encrypted transactions.
The mechanisms public keys and private keys use are also different. Private keys are needed to both encrypt and decrypt information. That means it’s shared between the receiver and the sender of the transaction. By comparison, the public key is only used to encrypt data. It needs a private key to decrypt the transaction.
When it comes to speed, public keys and private keys are vastly different. A private key is markedly faster than its public key counterpart.
The last difference on our list focuses on how private keys and public keys handle privacy and security. Using private keys allows for confidentiality as it is only used to perform transactions between senders and receivers. Unfortunately, the same can’t be said for public keys, as they are available for anyone to view and use.
Now that you have a better idea of public and private keys and how they work, you have an idea of why it’s important to protect your keys. You can do this by using our Bitcoin Depot app, which has a built-in non-custodial wallet. With a non-custodial wallet, you’re in charge of your keys and your funds.
Whether you're new to crypto or you've been in the industry for years, there's always something new to learn. No matter how long you've been around digital currency, there are simply some things you should know.
These are terms that will help you get a better understanding of Bitcoin, the blockchain, and cryptocurrencies as a whole.
What are we waiting for? Let's jump in. Here are our 10 Bitcoin terms you need to know.
To understand Bitcoin, you need to know what a blockchain is. There's a good chance you're heard the term blockchain but don't have a solid understanding of what it is. A blockchain is a distributed ledger in a digital format. These ledgers are composed of transactions made using a specific cryptocurrency.
Transactions are gathered and verified to make up a "block." Upon reaching its capacity, a block is added to the chain, and a new block is formed. A blockchain network like Bitcoin is public, which means anyone who can access it can view all transactions. This is contrary to what many people believe about Bitcoin and anonymity.
As Bitcoin gains more market traction and attention, it becomes easier to trace transactions back to a specific person. This is especially true when using a centralized crypto exchange that requires KYC (Know Your Customer) verification.
Most blockchains - like the Bitcoin network - have their own public digital ledger. If you want to see what one looks like, here's Bitcoin's. The public ledger is where you can see every transaction that takes place on the blockchain associated with a certain digital asset. However, there are some projects which set themselves apart by creating an anonymous ledger, which gives users privacy when performing transactions.
KYC - which we touched on previously - is a term used for compliance. Most of the major crypto exchanges require users to go through KYC when creating an account. Know Your Customer refers to performing the necessary background and identity checks used to evaluate the suitability of creating a business relationship with a particular individual.
With the recent failings of larger exchanges within the crypto world, don't be surprised if you start to see this acronym more often. It's a way for financial services companies to verify the identity of their customers.
Anti-Monday Laundering is important because it requires exchanges and other crypto institutions to monitor and keep an eye out for certain transactions to help detect and report suspicious activity, including money laundering. If these transactions occur, the platform is required to report any suspicious activities to the proper authorities.
Most often, crypto mining is thought of with Bitcoin. However, many digital currencies use mining to secure their crypto network. Mining is the process of validating transactions on the blockchain. This process uses a lot of energy and computing power, as it requires solving complex, encrypted algorithms. The miner who solves the algorithm first earns the awards for that block.
Blockchains use a consensus mechanism to validate blocks. Bitcoin miners are part of the network's Proof of Work consensus process. Miners use computing power to be the first to solve the algorithm. Once the block is solved, the miner who provides their work first gets the rewards.
However, because a lot of computing power is needed with Proof of Work, a lot of energy is consumed in the process, which many within the industry argue is not environmentally friendly.
You know what a wallet is, but do you know about crypto wallets? These digital wallets come with wallet addresses that tell others where to send your crypto. They also show that the crypto you own belongs to you.
Crypto wallets are used to store your digital assets. Wallets have public and private keys (which we'll talk about more in a bit), seeds, and addresses, all used to send and receive crypto assets. There are many different types of wallets, including hot wallets, cold wallets, hardware wallets, software wallets, desktop wallets, and paper wallets.
Some wallets, like hardware wallets, require more technical knowledge to use than software wallets, but they're also more secure since they keep your crypto assets offline. Exchange wallets keep your cryptocurrencies online, which means they're at risk of theft if the platform is hacked or compromised.
Your private key is arguably the most important part of your cryptocurrency wallet. This string of letters and numbers is used to protect your funds. If you share your private key with anyone, they could easily steal your crypto. You need your private key to validate transactions when sending or withdrawing crypto.
Along those same lines, your public key is used to buy or receive crypto. This is a public string of numbers and letters used to tell others where to send your digital assets. For example, if you're running a business and customers want to pay with crypto, you could display your public key, so they know where to send payment.
Many merchants will display a QR code so you can quickly scan the address instead of manually typing in a bunch of numbers and letters.
Last on our list of Bitcoin terms is fiat. Also known as fiat currency, this type of money consists of two primary features. First, fiat money is government-backed, and second, it's not backed by a commodity like gold or silver.
Since the United States no longer uses the gold standard, US dollars are fiat currency. Their value depends entirely on the collective faith that citizens have in the US government.
Now that you're familiar with all these terms, you need to take your fiat currency and head to the nearest Bitcoin Depot BTM. Once you're there, you can create a wallet and use your private and public keys to get your hands on some Bitcoin, a cryptocurrency that was mined at some point using the Proof of Work consensus mechanism.
You get the point. Take your newfound knowledge and put it to good use. There's a Bitcoin Depot BTM waiting for you just around the corner.
When Satoshi Nakamoto first envisioned the idea of Bitcoin and published a white paper on the idea, he imagined a peer-to-peer electronic cash system that would work outside traditional, centralized financial institutions. The transactions would be time-stamped and recorded on a virtual ledger, making them transparent and immutable—no need for banks or a single third-party entity to facilitate transfers. Transactions would be validated by a network of computers, creating a chain of nodes to verify each transfer and eliminating the need to trust a lone mediator (link).
Satoshi released the white paper amid the 2008 global financial crisis. He imagined Bitcoin could be a way to avoid a similar problem from happening in the future by diminishing reliance on central banks. The paper was initially sent to an email list of people interested in cryptography.
In creating Bitcoin, Satoshi sought to:
Just months after Satoshi released the Bitcoin white paper, the first Bitcoin was mined on January 3rd, 2009 (link). For the first two years, Bitcoin barely stayed above $0.00. It wasn’t until 2011 that Bitcoin finally reached a dollar. Since then, Bitcoin has climbed to as high as $68,990.90 in November 2021.
It is well-known that the name Satoshi Nakamoto is actually a pseudonym, and the person or persons behind the invention of Bitcoin is still unknown. Even without a visible founder backing the coin, in the years since the first Bitcoin was minted, Bitcoin has become synonymous with the word cryptocurrency. It has consistently been the top coin by market capitalization.
Over the years, Bitcoin has been used as both a store of value and a form of currency to buy products and services. Famously, in 2010, an early Bitcoin adopter used 10,000 Bitcoin to buy two Papa John’s pizzas. That 10,000 Bitcoin today would be worth more than $300 million in 2022. Today, Bitcoin is accepted for payment across industries at places like car dealerships, major retailers, and restaurants (link).
Key Takeaways About Bitcoin:
The cashless system Satoshi envisioned in his 2008 white paper is more than just a way to conduct digital transactions. Bitcoin is the idea incarnate of a decentralized financial system outside the hands of a single government or person. Based on the coin’s popularity, the concept of a trustless banking system has caught on. If the currency continues at this adoption rate, it could eventually surpass gold in recognition.
Right now, you can stop by any of our Bitcoin ATMs to buy your own digital currency just like you would at a cash ATM. With over 7000+ locations (link) across the U.S. and Canada, it’s easy to find a Bitcoin Depot ATM to use wherever you are. If you’re new to crypto, check out our user guide and videos (link) to learn more. You can also download our mobile app on the App Store or Google Play to send, receive, and store crypto through your mobile device.
If you're looking to buy cryptocurrencies like Bitcoin with cash at a cryptocurrency ATM (Bitcoin ATM), then it's important that you know which wallets will be great options to get the job done properly. As the popularity of digital currencies has increased in recent years, so too have the number of ATMs available across the world. Some ATMs allow users to exchange their fiat currency into crypto and others allow them to do transactions in reverse (also known as 2-way Bitcoin ATMs). This blog post will discuss five of the top cryptocurrency wallets for use at these machines.
Exodus is a secure wallet for beginners that comes with good customer support. It also offers optional cold storage options, making it easy to store your coins with peace of mind!
Exodus is a wallet that has been gaining popularity over the past several months. It's perfect for beginners and also offers great customer support, which can be hard to come by in this market of crypto enthusiasts who are all trying their best not only with research but investing money as well!
The user interface (UI) provides an easy-to-use experience while still providing enough customization options so you don't end up feeling limited or bored after just one month on board.
One of the best wallets to use at cryptocurrency ATMs is the Ledger Nano S. This hardware wallet allows users to store their private keys offline, which protects them against hackers and other types of security threats. The device itself must be plugged into a computer or phone before any transactions can take place. Even though this method does require more work than some options, it provides maximum protection with little room for error.
Price:$60-$120 (depending on model)
If you're a tech-savvy Bitcoin user who's been around the block, then there are some wallets that might be better for your needs. In this case, it would benefit you to have something more robust and customizable.
One of the most popular options is Electrum. This wallet has been around for quite some time and provides you with a great deal of power over your own crypto!
Accessing your crypto exclusively from your iPhone? A mobile wallet is the best choice. The Breadwallet (now known as BRD) is a great option for iPhone owners. It's free, easy to use, and very lightweight - making it the perfect wallet for anyone looking for something simple!
Is Android more your flavor? While the Bread Wallet is now also available on Android, the Mycelium wallet is a better fit for those sporting a Google-based smartphone. Mycelium is extremely versatile and is not limited to just Bitcoin. You can also use it with DASH, Ethereum, Litecoin, Dogecoin & Namecoin! It also has native integration with ShapeShift, so you can easily trade between these cryptos as well right within the wallet.
This wallet has been around since 2013. For people who are familiar with Bitcoin or other cryptocurrencies, this will be a fantastic choice because their interface makes everything about using cryptocurrency much easier than expected. They also have great features like Ledger Nano S integration which means you can store all of your coins in one place that supports multi-currency storage (very convenient).
In conclusion, when it comes time for your next crypto ATM transaction, make sure that the wallet of choice is one with high-security standards that will protect your coins every step of the way. Also, ensure that whatever wallet you choose can easily connect up via QR code scanning right at the ATM kiosk itself - this ensures easy access without having to manually type in an address or seed words each time!
With Bitcoin hitting new all-time highs and major news breaking almost every day, now seemed as good a time as ever to look at some of the biggest misconceptions people tend to have about this popular form of currency: does its value rely on nothing? Is Bitcoin too volatile or risky with no real-world use? This article separates fact from fiction (without ignoring any potential dangers along the way) to get down to business when answering these kinds of vital questions.
Bitcoin’s price reached an all-time high in 2021 and many people feel that they’ve missed their chance to get in on the ground floor. But here’s the kicker: just before the COVID-19 pandemic began, the price of Bitcoin was still around $5,000. And since 2017, its price has been surging near $20,000 before sharply dropping down towards $3000.
JP Morgan Chase has estimated the price of Bitcoin could reach $146,000 per coin and Citigroup predicts a price of up to $300,000. The road to $100,000 has been speculated since Bitcoin’s inception, so it's not surprising that some predictions range up to $1 million per coin!
While it’s true that some people buy Bitcoin as an investment, this doesn't make it a speculative or economic cycle like those characterized by unsustainable rises in market value that pop when investors realize prices are much higher than the asset's fundamental value. Bitcoin often faces comparisons to various infamous bubbles such as tulip mania where speculators caused prices for certain varieties of tulips with surges 26-fold before crashing six months later.
Comparing Bitcoin to Amazon’s Stock
Bitcoin has gone through multiple price cycles over the course of 12 years, but it's always managed to bounce back and reach new highs. It's like a boom and bust cycle as with any other new technology; Amazon stocks lost their value at the end of 1999 after going from $100 down to around $5 - only for them to become one of today’s most valuable companies in less than 20 years time.
Volatility In Young Markets is Normal
Some major Bitcoin investors believe that the volatility of this currency is typical for a young market and will change as it matures. They say that while Bitcoin can peak in surges, there are longer periods between these bursts where prices remain more stable than they have been historically.
Bitcoin is the first-ever electronic currency to use cryptography and blockchain technology. The core protocol has functioned securely with 99.9% uptime since its creation in 2009. This continues today without interruption or security breach of any kind despite handling more than 300 million transactions a day at times. The Bitcoin network has never been hacked and its open-source code is constantly being tested & reviewed by countless security experts and computer scientists alike.
Bitcoin was also the first digital currency to solve what's called "the double-spend problem", a challenge that has long been thought impossible until Bitcoin came along. In essence, this means all transactions are irreversible. It would be virtually impossible to steal or counterfeit bitcoins without significant computing power (and even then it might not work).
The energy-intensive process of Bitcoin mining has a lot to do with its environmental impact. But, determining the full extent is difficult because everything in modern life requires some level of energy, from banking and powering office buildings to just opening an ATM or going into your local branch for help on something. What's more, Bitcoin miners have made strides toward reducing their carbon footprint since it was first mined back in 2009, thanks largely due to advances like hydroelectric power plants that don't burn any nonrenewable resources.
Bitcoin mining is not as bad for the planet as people think. According to Cambridge researchers, 20% of Bitcoin miners are powered by renewable energy sources like wind and solar (which can be harnessed without any long-term adverse effects on our environment). The actual number ranges from 20% to more than 70%, according to Cambridge Bitcoin Electricity Consumption Index. The research concludes that "Bitcoin's environmental footprint currently remains marginal at best."
Bitcoin is the new way to make financial transactions with the power of cyberspace. It's like using email for money, and it will empower people all over the world who don't have access to traditional banking systems or want privacy in their finances. Even with these differences, you can still walk into your local Circle K gas station and use a Bitcoin ATM to withdraw or deposit cryptocurrency just as you would with your traditional bank account.
Critics like to claim it's not useful in the real world, but this statement couldn't be more wrong. Bitcoin can help people pay anyone anywhere without a bank or payment processor in between giving both sides privacy and cutting down costs of transactions. It also acts as a hedge against inflation by major institutional investors who are turning their capital into cryptocurrencies such as Bitcoin due to how volatile fiat currencies have become lately (United States Dollar Index).
Bitcoin has been called "digital gold", because, like gold, it has been made to be finite in quantity: 21 million to be exact. The difference is that gold is both heavy and bulky, making carrying large amounts difficult. However, Bitcoin can easily travel through digital space via your mobile phone.
The truth behind the Bitcoin hype is coming to light as more and more innovative uses of blockchain technology are deployed. As time goes on, it will become easier for people to see that this new form of currency holds potential in revolutionizing commerce everywhere.