In the Chapter-1 of Blockchain wallet, we discussed Private Key+Public Key+Wallet Address. In today's segment of the Blockchain Wallet, Chapter-2, we will get into more details of Private Key in particular and what are the various forms of Private Key that we come across when we download and install a wallet.
Before we begin with, let me remind you that from Private Key to Public Key is always a one-way function and we can't go in the reverse direction, that is practically not feasible either, rendering a Blockchain wallet & its use secure. But how secure it is, is always pivotal to how you handle and store your private key.
Private Key & Mnemonic Key
Let's have a recap of Chapter-1 of Blockchain Wallet.
In the traditional financial system(Bank account), you have a Bank account number, when you receive money from your counterparty, you share your bank account with him/her.
When you send money (say through internet Banking), you use your transaction password(unique to your account) and OTP(unique to a particular transaction).
To draw a comparison,
Public Key/Wallet Address ~ Bank Account Number
Private Key+Password ~ Transaction Password+OTP
Password is something that you set for a wallet during installation. Please do note that when you set your password that is local to your device. The private key is still paramount, because if someone gains access to your private key(but does not know your password), then he can still gain access to your wallet from some other device(setting a new password on another device). So private key is what you should always keep secret and you should handle carefully.
Now when you download and install a wallet, you come across the private key, precisely you are required to keep it safe and private all the time.
So what are the different forms of the private key that you see when download and install a wallet, and how important it is to secure your private key, keeping it private all the time?
Do remember that in the decentralized wallet, you have absolute control, which means no other party can access your wallet.
Since this post is central to the private key and its various forms, we will also classify the types of the wallet as a deterministic and non-deterministic wallet. The other types of classification of wallet can be hardware & software wallets, web wallet or desktop wallet, decentralized wallet or exchange wallet, online/off-line wallets, etc-- this we will cover in the next chapter. Today we will stick to deterministic and non-deterministic wallets & various forms of the private key.
Non-deterministic wallet & Deterministic wallet
A Blockchain wallet always comes with a key pair- private key & public key. In non-deterministic wallets, you can create many such pairs, but the pairs are not rooted to a single seed, which means every time you generate key pair in a non-deterministic wallet, you have to keep it secure. So if a person strategically uses a different public key & address every time(for anonymity), then it becomes hectic management of securing your private key. Because every time you do so you have to take care of the private key also.
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In contrast, a deterministic wallet comes with a seed key, all the subsequent private/public key pairs are rooted to that seed key. So in such a wallet, even if you use a different public address, you don't have to back up the associated private key every time, as all the subsequent keys are rooted to the seed, backing up the seed will be enough, as the seed will automatically take care of the rest of the keys.
Various forms of Private key
- Private Key(A string of alphanumeric characters)
- Mnemonic key(Seed)
- Keystore file
Private Key
A private key is a string of alphanumeric character and that is created randomly using cryptographic functions as soon as you create a Blockchain wallet.
4CFE51F09890AA03D721EE49B196F8A831F973C2679764B06B1902B519A5B305Using this key you can unlock & spend your crypto assets. So this should be kept secret and should be kept safe all the time.
Mnemonic Key
This is another form of the private key, also known as a mnemonic phrase, mnemonic passphrase, seed key, etc. You can perform the same function as that of a private key.
The essence of the mnemonic key is that it is easy to handle, human-readable, and can also be memorized. Generally, BIP-32, BIP-39 specifications are used for mnemonic phrases. The mnemonic phrases are generally 12, 15, 18, 21, 24 words long.
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It can be used to restore a wallet, reset the password, can be used to generate wallet addresses. But always pay attention to the sequence of words when you store it and when you restore a wallet.
When you restore a wallet using mnemonic phrases it will show you all the addresses containing in it. Further, once you restore your wallet using the mnemonic key, you can also generate new wallet addresses.
Keystore File
The Keystore file is another form of the private key, but a Keystore file alone is not a private key(a JSON file). When you set up a wallet you set your own password locally on your device for that wallet. If you have backed up the Keystore file, then you can restore your wallet again with the help of the Keystore file and the password (set by you previously).
So we can say Keystorefile+Password(set by you)= Private Key.
This is how it is different from Private Key and Mnemonic Key. In the case of a Private Key or Mnemonic phrase, you don't need the password(set by you) when you restore your wallet.
General Practice during download & installation of a deterministic wallet
- Once you download a wallet, the setting up of the wallet begins with storing your mnemonic key, pay attention to the sequence of the words as you are required to enter the words in the correct sequence, and then set your password.
- You can import another wallet, should you know the private key/mnemonic key of that wallet.
- You can export the keys of the existing wallet.
Tips to keep your mnemonic key/private key safe
- Never store your private key/mnemonic key in your email/never send it to another email.
- Don't take a screenshot of your private key/mnemonic key.
- Avoid making a digital copy & storing it in cloud services.
- The best practice is to write it down on a piece of paper and making more than one copy of it. Better laminate it. But don't write all the words of the mnemonic phrase on a single piece of paper. The best practice is to divide it into 3 or 4 parts.
- You can also store it in a pen drive which is not used before. But even if you do so, never forget to keep a hard copy by writing it on a piece of paper.
Homework-Task
How do I download & install a wallet? Examples(Hint- Etherum, Tron, etc or any other you wish to)? How do I restore a wallet using a Private key/Mnemonic key/Keystore file? How important is the Mnemonic key or Private Key or Keystore File during the installation/restoration of a wallet? How do you store/secure your keys? Examples? Any Blockchain wallet you have used before, having the experience of any/all the three forms of keys-- Private/Mnemonic/Keystore file?
Guidelines
- Your article should be at least 400 words.
- It is always better to gain user experience (in any Blockchain wallet) before submitting your article.
- Refrain from spam/plagiarism. This task specifically requires screenshot(s) of your own experience with a wallet. Use images from copyright-free sources and showcase the source, if any.
- This homework task will run till 21st-Feb'2021.
- Add tag #sapwood #cryptoacademy in your post and should be among the first five tags. You can also use other relevant tags like #blockchain #crypto #wallet or any other relevant tag.
Thank you.
(Please feel free to join the comment section if you have any doubt on Homework-Task)
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