While a lot of people are TALKING about crypto, not many actually "get it." because they understand well the basic terms. This short guide will explain you difference between  private and public key, what is 'seed',wallet address,


Public/private key cryptography

Cryptocurrencies (and that is where their name comes from) are based on cryptography, which can be seen as the art of making mathematical problems very difficult to solve.

With Bitcoin, a specific cryptographic algorithm is used, which is called Elliptic Curve Digital Signature Algorithm, or ECDSA. This algorithm ensures that "funds" on the Bitcoin network can only be spent by their rightful owner and not by anyone else. Other cryptocurrencies might use different cryptographic algorithms, but they all achieve the same goal.

An important concept to understand how cryptography is applied to cryptocurrency. It is called a signature scheme, which is made of two parts:

    - The signature, where an owner uses his private key to produce a digital signature.
    - The verification, where the signed message and the public key are used to check whether the digital signature has been made with the associated private key.

As you probably see it by now, the key concepts to grasp in this scheme are the public key, the private key and the digital signature. The verifying key is always public as it can be used by anyone to do the verification. Generally, this key is referred to as the public key.

The signing key on the other hand has to remain private, which is also why it is commonly called the private key. Typical of any public/private key cryptography is the fact that every public key matches with a corresponding private key. Both of these keys are created in pairs and they always have a definite mathematical relationship.

Private keys are also depicted as a string of alphanumeric characters, making it hard for hackers to crack. Here's an example:

    F2843D59C6D87DC0FB6A5118633389F4453213303DA61F20BD67FC233AA332F4

A public key allows you to receive cryptocurrency transactions. It's a cryptographic code that's paired to a private key. While anyone can send transactions to the public key, you need the private key to “unlock” them and prove that you are the owner of the cryptocurrency received in the transaction.

These keys often come in the form of long strings of alphanumeric characters. Here's an example:

    9048 0141 01C9 181A CF8D EB2F EF15 FA37 B9B1 E019 EA27 EC21 5F35 A577 EE21 D4FB F6E4 4E11 7186 FC8F 5AFA 462F 322B F31B 3F40 F744 A6E4 C1DD 2081 D073 C02B 4103 C226 E4CD CB32 0321 0004


Difference between private key and seed

The private key is what grants ownership over the funds on a wallet address. ... You must not share your private key to third-parties to avoid granting them access to your funds. The seed of any wallet, normally known as the 12-24 secret or seed words, is just a mnemonic phrase generated from the private key of your wallet.




Different types of crypto wallets: Cold vs hot storage

When it comes to crypto wallets, there are countless specific solutions on offer, but more or less all of them fall into two main categories: hot or cold. Hot storage media are entirely online and include a wide range of individual wallet types. They are generally considered more user-friendly and accessible than their cold alternatives, but this comes with an elevated security risk. Cold wallets, on the other hand, are offline and — while a bit tricky to get to grips with — there's no safer way to store large amounts of crypto.

Web/online wallets

These are perhaps the most popular hot storage option, particularly among casual buy-and-hodl investors. Typically, these wallets are hosted on crypto exchanges and are used to hold currency purchased on the exchange in question. They are incredibly convenient and thus make owning cryptocurrency a possibility for a wide range of people of different ages with varying levels of technological literacy. The only downside to online wallets is their relative vulnerability to hacker attacks. Indeed, every year, we see numerous stories of big-name exchanges falling victim to coin thefts.

Mobile wallets

In essence, there's a lot of difference between a standard online wallet and a mobile one. Putting aside the fact that mobile wallets are portable and take the form of an app, the technological basis is much the same. That said, some mobile wallets are integrated with trading platforms and, therefore, offer greater functionality. They might, for example, include live charts and one-touch trading capabilities.

Desktop wallets

Desktop wallets are quite similar to mobile wallets in that they're software-based and stored as a programme file. They also offer integration with exchanges and trading platforms while allowing users to purchase goods and services from vendors who accept crypto payments. Some argue that desktop wallets are more secure than their mobile counterparts, a claim that does have some truth to it. However, while there are many more attacks on mobile systems due to their widespread use, desktop wallets are only as well-protected as the machine they're installed on. If you don't have a strong firewall and good anti-malware set-up, you're just as vulnerable as any other hot wallet user.

Hardware wallet

This is probably the most popular cold storage medium in use. Hardware wallets come in various shapes and sizes, but their users usually look for small, portable devices that are, of course, durable. The two biggest brands on the market are Ledger and Trezor, both featuring in most top hardware wallet rankings.

Paper Crypto Wallets

Paper wallets are considered the most secure. Private and public keys are printed on paper in the form of a QR code or a set of numbers and letters. To make any manipulations with the wallet, you need to scan the code or enter the keys yourself. Paper wallets are easy to create, but there are some downsides to such storage. Paper wallets quickly deteriorate, so most often, they are laminated. If you lose the key to such storage, you won't be able to restore access to your crypto assets.


Wallet addresses

A wallet address, just like a home address, is a direction that leads directly to your cryptocurrency wallet. Each cryptocurrency wallet is assigned an address, which people can then use to receive funds.

Wallet addresses are essentially hashed versions of the public key. Public keys are compressed and shortened to make it easier to send an address.

Here's an example:   (ETH address)

0x75bad4739dcb4219a74e7cbfae99489461cff9ce


Where's private key stored?

Metamask wallet - Metamask stores your private key locally on your computer, within the browser data in particular. This is a huge step up in security terms but it is still conceivable that somebody might hack your PC and get the key. Perhaps the only safer options would be hardware wallets like Ledger or paper stored wallets, which are less convenient for frequent use. Indeed, it is possible to connect Metamask to hardware wallets like Trezor and Ledger. This is an ultimate combo - 100% security combined with Metamask's functionality.

Exodus wallet - The private keys to your blockchain assets are generated and encrypted locally and stored on your device. These keys are never stored in the cloud and they remain 100% for your eyes only, 100% in your control.  So unlike wallets on exchanges, if your Exodus wallet is hacked, hackers will not be able to take your funds since the private keys are with you on your device.

Enjin Wallet (mobile) - The Enjin Wallet is engineered with defence-grade security. Your private keys and recovery phrases are stored only on your device using AES 256 encryption and never transmitted. You can use your recovery phrase essentially as your private key, as it allows you to fully own the wallet and the funds inside it.

Ledger/Trezor - Your private keys are hold in a chip, they never leave it. Whenever a payment needs to be made, the transaction is signed inside the secure element and the private keys are not even visible by the computer the Ledger Wallet is connected to.
PERSONAL PIN CODE. Every time you connect the Ledger Wallet in the USB port of your computer, you need to enter a PIN code. Fail to enter the proper PIN code three times, and the Ledger Wallet is reset, erasing its entire contents.

Kraken/Coinbase wallets - When you set up a wallet on an exchange like Kraken or Coinbase, the private keys are stored on the exchange' s server so you are not the only righteous owner of your account. This is why it is possible to fall victim to hacks and other security breaches


What happens when bitcoin hardware wallet company goes out of business or updates software, can you lose your coins?

No. It's because you still have the 24-word passphrase and the public key (or blockchain address). Using these, you can replicate your hardware wallet on another wallet, or a software wallet.


Conclusion

-   A public key is to cryptocurrency what an IBAN is to a bank account: the address on which you can receive money on a blockchain.
-   The private key is what authorizes you to control funds attached to a public key and initiate transactions from that address.
-    Public and private keys are always created in pairs.
-    A secret phrase (seed) is a human-readable master private key in the form of a sequence of words. It can contain an unlimited amount of public/private key pairs.
-    If a secret phrase/private key is lost, there is no way to retrieve it.