Public and private keys make cryptocurrencies possible by allowing users to transact without the need for third-party verification.
Private keys function like a pin number for a credit card. Users who store their funds on a custodial wallet or centralized exchange are handing responsibility for protecting their private keys over, similar to trusting a bank with protecting your money.
Users who maintain a non-custodial wallet are responsible for their private keys, which is a list of encoded words, known as a seed phrase.
A public key is a numerical sequence derived from and paired with a private key, which allows for funds to be sent to an address, similar in the real world to sending a letter to a physical address.
Public keys are anonymous yet transparent, while private keys are not directly tied to the owner’s identity.
Tools such as CertiK’s Skynet and SkyTrace, help projects keep track of the activity that occurs on-chain by tracing and visualizing the flow of funds and generating in-time insights of transactions.
