Explain the Relationship between a Private Key, Public Key, and Wallet Address.
The private key is a secret, large random number used to sign transactions, proving ownership of funds. The public key is mathematically derived from the private key using Elliptic Curve Cryptography (ECC) and is publicly shared.
The wallet address is then derived from the public key using a one-way hashing process (SHA-256 and RIPEMD-160). You can derive the public key from the private key, and the address from the public key, but not vice-versa.
Glossar
Public Key
Address ⎊ The public key mathematically derives the wallet address used to receive funds, collateral, or option contract payouts on the blockchain.
Key
Function ⎊ A key, within cryptocurrency, options, and derivatives, represents a cryptographic identifier enabling access to digital assets or contract terms, functioning as a prerequisite for executing transactions or asserting ownership.
Elliptic Curve Cryptography
Foundation ⎊ Elliptic Curve Cryptography represents a public-key cryptographic approach fundamentally based on the algebraic structure of elliptic curves over finite fields, offering a method for secure communication and digital signatures.
Wallet Address
Identifier ⎊ A Wallet Address is the publicly shared, alphanumeric identifier derived through a one-way cryptographic process from a user's public key, serving as the destination for receiving cryptocurrency funds.
Private Key
Ownership ⎊ The private key is the definitive proof of non-custodial ownership over the associated cryptocurrency or the collateral securing a derivative position.