In crypto there are no usernames and passwords held by a company. Instead, control of funds comes down to cryptographic keys. Understanding them is the single most important thing for keeping your assets safe.
Public key, private key
Every account is a pair of mathematically linked keys:
- The public key (and the address derived from it) is like an account number. Share it freely so people can send you funds.
- The private key is the secret. Anyone who has it can move the funds. Never share it, ever.
The magic is that the private key can produce proof it exists without revealing itself. That proof is a signature.
What a signature actually does
When you send a transaction, your wallet uses your private key to create a digital signature over the exact details (amount, recipient, fee). The network can check that signature against your public key and confirm two things: the transaction was authorised by the key that owns the funds, and not a single character has been altered since. If either fails, nodes reject it.
Seed phrases: your keys, human-readable
Remembering a raw private key is impractical, so wallets show you a seed phrase (also called a recovery phrase) — usually 12 or 24 ordinary words. That phrase can regenerate all your private keys. It is your wallet. Anyone with those words has your funds; lose them with no backup and your funds are gone for good.
Signing prompts: read before you approve
When a website asks your wallet to sign something, that prompt is you authorising an action. Blind-signing a malicious request can approve draining your tokens. Slow down, read what's being requested, and reject anything you don't understand.
Why it matters
Keys are why crypto can be self-custodial: no permission needed, no account to freeze. But that freedom means the responsibility is entirely yours. Master this and storing crypto safely becomes straightforward.
Next up: put it into practice with Where to store your crypto.