Private Key
A private key is a secret number that lets its holder authorize transactions and control the crypto linked to it. Whoever has the private key effectively owns the funds, so it must never be shared.
How a private key works
A private key is a very large random number, in Bitcoin and Ethereum 256 bits long. From it, a public key is calculated, and from the public key an address is derived. This works only in one direction: you can derive the address from the private key, but not the private key from the address.
When you send crypto, your wallet uses the private key to create a digital signature for that specific transaction. The network checks the signature against your public key. The private key itself never leaves your wallet and is never sent to the network.
Private keys and seed phrases
Modern wallets rarely show raw private keys. Instead, they generate a seed phrase, usually 12 or 24 words, from which all of the wallet's private keys are derived. Writing down the seed phrase is how you back up every key at once, and anyone who obtains it can recreate your wallet and take your funds.
Who holds the key?
If you use a self-custody wallet, you hold the keys. On a custodial platform such as a centralized exchange, the company holds the keys and you have a claim against it. The phrase not your keys, not your coins captures the difference: when exchanges such as Mt. Gox in 2014 or FTX in 2022 collapsed, customers could not withdraw their crypto.
How keys get lost or stolen
Common causes are phishing sites and fake support agents asking for a seed phrase, malware that reads clipboards or files, photos of the seed phrase stored in cloud backups, and simply losing the only copy. A hardware wallet keeps keys on a separate device so they are not exposed to your computer. No legitimate service will ever ask for your private key or seed phrase.
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Frequently asked questions
What happens if I lose my private key?
If you have no seed phrase or other backup, the funds are permanently inaccessible. No company or network can reset it.
Is a private key the same as a password?
No. A password can be reset by the service that issued it. A private key is the ownership itself, with no reset option.
Can someone guess my private key?
Not if it was generated with proper randomness. The number of possible keys is so large that guessing is practically impossible. Weak or manually chosen keys are the exception.
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