The Good, The Bad, and The Ugly of Digital Currency - Part 7
Updated: Sep 7, 2022
Control: Private and Public Keys
This series of articles are intended to shine a light on all the bullshit out there about digital currency investment in your self-directed IRA. Decentralized IRA – Invest in digital currency and never pay taxes! If this is your goal, then you need to keep reading.
Private and Public Keys
The location of the cryptocurrencies, or what you own is private keys. Your private key is comparable to an actual key. A private key unlocks the right to buy, sell and exchange cryptocurrencies. Your private key should be just that, private. In the same fashion that you would not share the key to your safe at home, you would not share your private key to your digital currency. If anyone asks you to, then you are likely being defrauded.
In addition to a private key, there is a public key. There is a cryptographic link between the public key and the private key. It is possible to recover the public key if you own the private key. It is impossible to find the private key using only the public key. When you save a picture on your phone there is a file stored in the phone’s memory. When you use Microsoft Outlook, there is a local copy of your emails on your computer. Your digital currency is not physically present anywhere. There is no physical entity representing your digital currency.
Instead, there is a relation between the public key and the associated crypto. Blockchain technology makes it possible to know the balances associated with the public key. This technology also allows for the movement of digital currency through swapping or selling your crypto. This information is distributed and replicated across the blockchain network. The blockchain is transparent, verifiable, immutable record of all transactions made within a system which no one single person or group has control, making it fundamentally decentralized. Keep in mind that because of the way the blockchain works you may experience moments of panic as your balance of the digital currency may at times seems lost or stolen, when in fact a change wallet address may be associated with the transaction performed.