Banking today

• Prove your identity
• Have enough money to start
• Trust the bank and government to handle your private information
• Pay for maintenance
• Wait for everything

ID

money

trust the bank

account + access

Let's do banking

Bitcoin today

• Go online
• Generate a pair of keys

Let's do bitcoin

an address – Used to receive payments, can be shown to anybody

example 1: 1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy
example 2: qR code

private key ≈ secret key ≈ sk

private key

address

How is a pair of keys enough?

Prove your private key is the owner of your public key

​(sk,pk) := generateKeys(keysize)

Prove you own a public key without revealing the private key

sig := sign(message,sk)

Let everyone verify you own a public key without revealing the private key

isValid := verify(message,sig,pk)

private key ≈ secret key ≈ sk

public key ≈ pk

sig ≈ digital signature

source: Bitcoin and Cryptocurrencies Technologies

Private Key

An private key is a 256-bit randomly generated number between

 

 

The total number of 256-bit numbers is equal to \(2^{256}\)

see why \(2^{256}\) is an astronomical number

source: Mastering Bitcoin, LearMeABitcoin

"epiclabs"

Binary:
1101111101011011011000101011111001111100111011011110100110010101001001010101000001010111110011111001010101011001100001101001100001010000101010111101011001110101010010010101010101110000100110001110010010000110111000111110100010111100100111010111000000011111

Decimal:

101027229823651685479805873605520737270124184003399402029102140131823486595103

Hexadecimal:

df5b62be7cede995255057cf9559869850abd67549557098e486e3e8bc9d701f

SHA256

click to try

0 and 115792089237316195423570985008687907853269984665640564039457584007913129639935

Public Key

An public key is derived from the private key and is obtained through ECDSA (Elliptic Curve Digital Signature Algorithm).

• Start at G
• Draw a tangent
• Find the intersection (-2G)
• Take the inverse (2G)

This is one round of elliptic curve multiplication (i.e an elliptic curve multiplication of 2).

To find a public key, "multiply" G by the private key, i.e bounce around the ecliptic curve private key numbers of times.

source: Mastering Bitcoin, LearMeABitcoin

Public Key

Public Key = G * Private Key
Public Key = G * df5b62be7cede995255057cf9559869850abd67549557098e486e3e8bc9d701f 

Through ECDSA we get 2 new coordinates:

x = 81591541406288143274758265124625798440200740391102527151086648448953253267255
y = 64573953342291915951744135406509773051817879333910826118626860448948679381492

In hexadecimal

Public Key (x) = b4632d08485ff1df2db55b9dafd23347d1c47a457072a1e87be26896549a8737

Public Key (y) = 8ec38ff91d43e8c2092ebda601780485263da089465619e0358a5c1be7ac91f4

Keep only the (x) coordinate and discriminate the sign of the (y) coordinate

Public Key = 02b4632d08485ff1df2db55b9dafd23347d1c47a457072a1e87be26896549a8737

source: LearMeABitcoin

Address

An address is derived from the public key through the use of one-way cryptographic hashing (SHA256 and RIPEMD160).

 

Addresses are almost always presented to users in an encoding to help human readability, avoid ambiguity, and protect against errors (Base58Check).

 

Example: 1J7mdg5rbQyUHENYdx39WVWK7fsLpEoXZy

source: Mastering Bitcoin

Wallet

A wallet is a software application that contain your private key, can generate pair of keys and make things convenient for the user.

 

Wallets contain keys, not coins! Wallets are keychains.

• Nondeterministic (Random) Wallets
• Deterministic (Seeded) Wallets
• Mnemonic Code Words
• Hierarchical Deterministic Wallets

source: Mastering Bitcoin

How is a pair of keys enough?

Prove your private key is the owner of your public key

​(sk,pk) := generateKeys(keysize)

Prove you own a public key without revealing the private key

sig := sign(message,sk)

Let everyone verify you own a public key without revealing the private key

isValid := verify(message,sig,pk)

private key ≈ secret key ≈ sk

public key ≈ pk

sig ≈ digital signature

source: Bitcoin and Cryptocurrencies Technologies

Digital Signature

Used to claim ownership of your bitcoin (UTXO).

A digital signature (Sig) is public information, accesible to everyone.

It is unique to the message, i.e the signature changes with the message being signed.

 

Ran = G * Random Number
Sig = [Ran * Private Key] + Message / Random Number

Sig = [Ran * Private Key] + H[transaction] / Random Number

 

You can proof you own a public key by giving Ran and Sig to someone.

source: LearMeABitcoin

How is a pair of keys enough?

Prove your private key is the owner of your public key

​(sk,pk) := generateKeys(keysize)

Prove you own a public key without revealing the private key

sig := sign(message,sk)

Let everyone verify you own a public key without revealing the private key

isValid := verify(message,sig,pk)

private key ≈ secret key ≈ sk

public key ≈ pk

sig ≈ digital signature

source: Bitcoin and Cryptocurrencies Technologies

Verify a Signature

The goal is to verify that the public key and the digital signature were made using the same private key by giving them Sig, Ran, Private Key and Message.

Storing crypto assets

be able spend your coin whenever you want

make sure nobody else can spend your coin

managing your keys in a relatively easy way

cold storage

hot storage

hot side

cold side

hierarchical deterministic wallets

generate keys function

private key generation info

address generation info

generate address

generate key

\(i\) th address

\(i\) th
key

\(i\)

\(i\)

source: Bitcoin and Cryptocurrencies Technologies

hardware wallets

Ledger Nano S [LedgerWallet]

Trezor [SatoshiLabs]