A very common confusion in blockchain and cryptocurrency is what a private key is, what a public key is, and what the difference between them are. Adding to the confusion, QR codes have been growing in popularity acting as a third representation of either a public or private key, since a QR code can represent both.
In general, every digital wallet where transactions are processed on the blockchain has a public key and a private key. Both keys are integral to performing transactions on the blockchain, yet their usage is vastly different.
What is a public key
The public key is used for depositing and receiving funds. One cannot access funds with only the public key, and therefore the public key is often compared to an account number for a regular bank account, or email address on Paypal. Basically any unique identifier for someone to transfer funds to your account.
The public key is created through a complicated mathematical algorithm that transforms the private key into a public key. Thus, making it extremely hard to hack. However, once someone knows your public key, one can see all your transactions ever made on the blockchain. In technical lingo, one can read, but they cannot write knowing your public key.
What is a private key
The private key is used to access funds on your blockchain wallet, and is therefore often referred to as your password.
The private key is in other words very important. If a user looses the private key, they will not be able to access their funds. No “forgot password” feature available here unfortunately. This is one of the key arguments for centralised exchanges over decentralised exchanges (DEX). However, in Blockbasis we believe we have found a perfect middle ground, where users hold their own passphrase to unlock their private keys, yet users can access their accounts via Google login or simply email/password.