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@ Nicolau Teixeira
2025-05-04 17:06:06In the Bitcoin system, the protection and ownership of funds are ensured by a cryptographic model that uses private and public keys. These components are fundamental to digital security, allowing users to manage and safeguard their assets in a decentralized way. This process removes the need for intermediaries, ensuring that only the legitimate owner has access to the balance linked to a specific address on the blockchain or timechain.
Private and public keys are part of an asymmetric cryptographic system, where two distinct but mathematically linked codes are used to guarantee the security and authenticity of transactions.
Private Key = A secret code, usually represented as a long string of numbers and letters.
Functions like a password that gives the owner control over the bitcoins tied to a specific address.
Must be kept completely secret, as anyone with access to it can move the corresponding funds.
Public Key = Mathematically derived from the private key, but it cannot be used to uncover the private key.
Functions as a digital address, similar to a bank account number, and can be freely shared to receive payments.
Used to verify the authenticity of signatures generated with the private key.
Together, these keys ensure that transactions are secure and verifiable, eliminating the need for intermediaries.
The functioning of private and public keys is based on elliptic curve cryptography. When a user wants to send bitcoins, they use their private key to digitally sign the transaction. This signature is unique for each operation and proves that the sender possesses the private key linked to the sending address.
Bitcoin network nodes check this signature using the corresponding public key to ensure that:
01 - The signature is valid. 02 - The transaction has not been altered since it was signed. 03 - The sender is the legitimate owner of the funds.
If the signature is valid, the transaction is recorded on the blockchain or timechain and becomes irreversible. This process protects funds against fraud and double-spending.
The security of private keys is one of the most critical aspects of the Bitcoin system. Losing this key means permanently losing access to the funds, as there is no central authority capable of recovering it.
- Best practices for protecting private keys include:
01 - Offline storage: Keep them away from internet-connected networks to reduce the risk of cyberattacks. 02 - Hardware wallets: Physical devices dedicated to securely storing private keys. 03 - Backups and redundancy: Maintain backup copies in safe and separate locations. 04 - Additional encryption: Protect digital files containing private keys with strong passwords and encryption.
- Common threats include:
01 - Phishing and malware: Attacks that attempt to trick users into revealing their keys. 02 - Physical theft: If keys are stored on physical devices. 03 - Loss of passwords and backups: Which can lead to permanent loss of funds.
Using private and public keys gives the owner full control over their funds, eliminating intermediaries such as banks or governments. This model places the responsibility of protection on the user, which represents both freedom and risk.
Unlike traditional financial systems, where institutions can reverse transactions or freeze accounts, in the Bitcoin system, possession of the private key is the only proof of ownership. This principle is often summarized by the phrase: "Not your keys, not your coins."
This approach strengthens financial sovereignty, allowing individuals to store and move value independently and without censorship.
Despite its security, the key-based system also carries risks. If a private key is lost or forgotten, there is no way to recover the associated funds. This has already led to the permanent loss of millions of bitcoins over the years.
To reduce this risk, many users rely on seed phrases, which are a list of words used to recover wallets and private keys. These phrases must be guarded just as carefully, as they can also grant access to funds.
In summary, private and public keys are the foundation of security and ownership in the Bitcoin system. They ensure that only rightful owners can move their funds, enabling a decentralized, secure, and censorship-resistant financial system.
However, this freedom comes with great responsibility, requiring users to adopt strict practices to protect their private keys. Loss or compromise of these keys can lead to irreversible consequences, highlighting the importance of education and preparation when using Bitcoin.
Thus, the cryptographic key model not only enhances security but also represents the essence of the financial independence that Bitcoin enables.
Thank you very much for reading this far. I hope everything is well with you, and sending a big hug from your favorite Bitcoiner maximalist from Madeira. Long live freedom!