At its core, a cryptocurrency wallet is a user interface layer that sits on top of your public and private keypair and hides the interface for accessing the blockchain. This key pair is your “passport” to the Web3 environment. A common saying, “Not Your Keys, Not Your Coins,” refers to the value of these keys and who owns them. But just what are these keys?
This blog post will go into deep detail about the math and cryptography behind keys and wallets so that you can understand how they work.
How Public-Key Cryptography Works
Before you can understand what a wallet is, you need to know what public key cryptography is. Public-key cryptography, also called asymmetric cryptography, is a way to send data securely over the Internet. Each user has two keys: a secret private key and a public key that everyone can see.
When Alice wants to send a message that only Bob can see, this is a classic example of how these keys are used, which is backward in crypto. Alice does this by encrypting the message with Bob's public key, which is widely known. Then, Bob uses his own key to figure out what the message says.
Modular, based on exponentiation, RSA is a well-known public-key cryptography algorithm that can generate keypairs and encrypt and decrypt messages. RSA is one of the most popular algorithms. It uses big primes to make key pairs.
Giving Out the Keys
When you make a new self-custodial wallet, a new private key is made. The public key is then worked out using the private key. On top of the wallet, your keys are used as a user interface.
Even though the way to get keypairs and addresses is always the same, what can be done with the private keys can be different between blockchains. This page has information about Ethereum.
Also Read : 5 Adjustments Cryptocurrency Wallets Should Make to Improve Web3 Adoption
How the Private Key Was Made
A private key is a 256-bit number that is made by chance. There are about as many private key addresses as there are atoms in the universe. The operating system or wallet program decides how random the private key is. When making private keys, it is important to have enough entropy so that the output is unpredictable.
Regain Master Seed and Phrase
Most wallets tell users to keep the recovery phrase in a safe place away from the wallet. This phrase, which is made up of 12–24 words in a certain order, can be mapped to the “Master seed.” The master seed, which is a random 256-bit number, can be used to make as many private keys as you want. Wallets can create multiple accounts, each with its own private and public keys, and you can use a single recovery phrase to get back all of them.
Putting a name to a transaction
Now that the keys are safely in your wallet, you can use them to “sign transactions” and do other web3 wallet development economy things.
It works in a way that is similar to how Alice and Bob encrypted their message to each other. When a user wants to “sign” a transaction on the blockchain, they put the transaction and their private key into a mathematical formula that makes the signature.
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