Transition to Web3 - Course 3 | Transactions and Bitcoin
If we want real amounts to be transferred between people, we need a layer of protection so that only the owner of an account can send money. If I was sending $ to someone else, I’d log in to my bank account with a combination of email address and password, right?
We need a system that allows the owner of an account, and no one else, to create proof that they authorize a transaction. This proof needs to be easy to check but impossible to fabricate.
This is where public and private keys come into play. The public key is similar to your email address — you can tell it to anyone so they can send you something. But a private key is similar to your password — you shouldn’t tell it to anyone; otherwise, they could access your account.
The public key is generated from the private key using an algorithm (the algorithm is Elliptical Curve Digital Signature Algorithm for Bitcoin).