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In the following sections we will explain what are public and private keys, how they are used as your addresses in blockchains, and what are and will be their use cases.
1. Private key and public key.
As mentioned in our first class, public key cryptography is used to manage accounts on blockchains.
The private key is a long number that is then passed through a one way cryptographic function to generate a public key.
It is a "one way" function because, even though your public key may be known by many, it is practically impossible to figure out the private key from it.
The private key must be kept secret because it is the only way to sign transactions and control your public key.
The public key is your account or "address" on a blockchain.
2. You address in a blockchain.
Blockchain addresses are not just the raw public key, but they are modified to fit each protocol.
For example, in the diagram above, the same public key may be expressed in a different base to be used as your address in the Bitcoin network. Or, a "0" and an "x" are added in front to use it in the Ethereum or Ethereum Classic blockchains.
3. Use cases of Private Keys and Addresses.
As the private key is unique in the universe, and you only have it, and it is secret, you are the only person who has access to it. This is one of the keys to decentralization in blockchains as nobody else, not even the government, may control your assets on the blockchain.
The address on a blockchain is analogous to a bank account in traditional systems, but where no bank or entity controls it except the owner.
The address holds your crypto assets inside a blockchain such as:
Native currencies
ERC-20 tokens
NFTs
Stablecoins
The combination of the private key and address is the property unit in blockchains.
In the future, it is very likely that vehicles, real estate, and other kinds of registrable assets may be posted on blockchains and recognized legally, so the combination of private and public keys will be the ultimate form of property rights.
Also, through your private keys, you will actually control and operate all these types of assets.
For example, your private key will also open the door to your home or will be used to turn on your vehicle.
Many projects are trying to add personal identification systems on the blockchain, so it is possible that private and public keys will be used as IDs as well.
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