Many people still don’t understand the wallets that store blockchain assets. Especially proper nouns such as address, public key, password, private key, mnemonic phrase, keystore, etc. However, if these concepts are not clarified, it may cause the loss of blockchain assets. How to safely protect cryptocurrency property?
Key words to know to protect cryptocurrency
Public key = bank account, address = bank card number
The “public key” is like a bank account, and the “address” is like a bank card number.
Take the Ethereum wallet as an example. After creating an Ethereum wallet, a string starting with “0x” will be generated. This string is the wallet “address”.
The “address” of the wallet is calculated from the “public key”. Just like the bank opens an account for you first, and then gives you the bank card number.
The main purpose of the wallet “address” is to receive money. Of course, it can also be used as a proof of transfer. Just like when someone sends you money, you need to tell them your bank card number.
Password = bank card password
When creating a wallet, you need to set a “password” yourself. Usually this “password” requires no less than 8 characters. For security, it is better to set a more complicated “password”.
There are two purposes for this “password”:
- You need to enter the “password” when transferring funds. It is similar to that you need to enter a password to transfer money to others with a bank card.
- When importing the wallet with Keystore, this “password” must be entered.
This “password” can be modified or reset. After entering the original “password”, you can directly modify the “password”. But if the original “password” is forgotten, you can use the “private key” or “mnemonic phrase” to import it into the wallet. At the same time set a new “password”.
In the real world, a bank card corresponds to only one password. After the password is changed, the original password becomes invalid. But in the blockchain wallet, a wallet can use different “passwords” on different mobile phones. They are independent of each other and do not affect each other.
Private key = bank card number + bank card password
After creating the wallet, enter the “password” to export the “private key”. This “private key” is a string of 64 characters. Of course, some wallets use different encodings and may have fewer characters. But a wallet “address” has only one private key and cannot be modified.
Just enter the “private key” and set a “password” to enter the wallet and have control over the wallet. At the same time, the coins in the wallet can be transferred away.
Therefore, the private key is equivalent to “bank card number + bank card password”. It is very important and must be stored properly. To protect cryptocurrency, you must remember the mnemonic phrase.
Mnemonic phrase = private key = bank card number + bank card password
As mentioned earlier, the “private key” consists of a 64-bit string, which is very easy to copy. So the “mnemonic phrase” appeared.
“Mnemonic phrase” is to help you record and remember. “Mnemonic phrase” consists of 12 words. There is a space between each word. Like the “private key”, a wallet has only one set of “mnemonics” and cannot be modified.
“Mnemonic phrase” and “private key” have the same function. Just enter the “mnemonic phrase” and set a “password”, you can enter the wallet and have control over the wallet. At the same time, the coins in the wallet can be transferred away.
The “mnemonic phrase” can only be backed up once. After being backed up, it will no longer be displayed in the wallet. Therefore, be sure to copy it down when backing up.
Keystore + password = private key
There is a function to back up the “Keystore” in the wallet. Select the backup “Keystore”, enter the “password”, a large code will appear. This is the “Keystore”.
When importing the wallet, just enter the “Keystore” and “Password” to enter the wallet. This is not the same as importing a wallet with a “private key” or “mnemonic phrase”, but directly resetting the “password”.
“Keystore” can be understood as the encrypted “private key”, which is related to the wallet’s “password”. After the “password” of the wallet is changed, the “Keystore” also changes accordingly.
It is important to note that when importing the wallet with the “Keystore”, you need to enter the “password”. This “password” is the wallet “password” when backing up the “Keystore”. It has nothing to do with whether the “password” is modified later.
Learn to protect cryptocurrency property
In the real world, if your bank card is lost and the password is forgotten, you can go to the bank to retrieve it for you. Your money is still your money. This is the advantage of centralization.
But in the blockchain world, if the wallet information is lost, no one will be able to retrieve it for you. Therefore, as long as you protect your wallet information, the property in the wallet belongs to you only and no one can take it away. This is the advantage of decentralization.