CS120: Bitcoin for Developers I

A bitcoin wallet contains a collection of key pairs, each consisting of a private key and a public key. The private key (k) is a number, usually picked at random. From the private key, we use elliptic curve multiplication, a one-way cryptographic function, to generate a public key (K). Froodm the public key (K), we use a one-way cryptographic hash function to generate a bitcoin address (A). In this section, we will start with generating the private key, look at the elliptic curve math that is used to turn that into a public key, and finally, generate a bitcoin address from the public key. The relationship between private key, public key, and bitcoin address is shown in Private key, public key, and bitcoin address.

Figure 1. Private key, public key, and bitcoin address

 

Why Use Asymmetric Cryptography (Public/Private Keys)?

Why is asymmetric cryptography used in bitcoin? It’s not used to "encrypt" (make secret) the transactions. Rather, the useful property of asymmetric cryptography is the ability to generate digital signatures. A private key can be applied to the digital fingerprint of a transaction to produce a numerical signature. This signature can only be produced by someone with knowledge of the private key. However, anyone with access to the public key and the transaction fingerprint can use them to verify the signature. This useful property of asymmetric cryptography makes it possible for anyone to verify every signature on every transaction, while ensuring that only the owners of private keys can produce valid signatures.