Last Updated on 1 hour by cryptoevent
When it comes to traditional money, it’s easy to see where it is. It exists physically in cash or in your bank account where you can withdraw it at an ATM or receive it as cashback. With digital currencies like Bitcoin, it’s a bit different. While you CAN withdraw from bitcoin ATMs, where your coins are held is a little more nuanced.
You own your private key, not quite the “crypto”
The most important thing about owning cryptocurrency is that when you own cryptocurrency, you really own the key to the account that hosts the cryptocurrency. Your coins are linked to two sets of keys:
The private key
Your private cryptocurrency key works like a real key. It is unique and designed to unlock the inside. A private key in crypto is private because it provides access to the cryptocurrency within an account or wallet. It’s like a bank password: keeping it private keeps the funds inside safe.
The public key
Your public key is like a bank number that you provide so others can send you money. It doesn’t have to stay private and no one can get your private key from your public address.
Together, your private keys and your public keys give you access to your crypto and provide a way to obtain crypto funds.
When you buy crypto or receive crypto, your cryptocurrency holdings are not actually kept or stored anywhere. Because it is a digital asset, they are not represented by a tangible asset. Instead of holding cryptocurrency, you hold the keys associated with the cryptocurrency. If you’re using an online wallet, the credentials with your keys give you access to the associated cryptocurrency, and if you’re using a hardware wallet, the same is true: you own the keys and those keys give you access to use the cryptocurrency in the account to use.
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