By EWN •
Published: 15 Oct 2021 • 11:25
Among the questions that many people ask when getting started with Bitcoin is, how do I prove that I own this virtual currency? Bitcoin is electronic or virtual money. That means you can’t have it in your purse or wallet like conventional currencies. Bitcoin uses a technology called blockchain that records all transactions in a public, open ledger, meaning you can assess your transaction history at any time.
However, determining the number of Bitcoin owners is not a trivial task. In most cases, people use the Bitcoin network addresses to determine the number of Bitcoin owners, holders, or users. But how can you prove that you own Bitcoin?
Bitcoin and the Keys
When you purchase this virtual currency on platforms like http://thenewsspy.technology/ using fiat money, you send it to a digital wallet. Also called crypto exchanges, these platforms enable people to buy and even sell cryptocurrencies with fiat money. Although you can keep Bitcoin on these cryptocurrency exchanges, the safety of your funds is not their priority. Therefore, experts recommend sending Bitcoin to a safe digital wallet.
To manage your Bitcoin in the wallet, you need a private and a public key. A private key enables you to sign or authorize an outgoing transaction. People use a public key to verify the signature. When transacting with Bitcoin, you use a private key to sign the instruction to send the funds. On the other hand, the public key verifies this signature, and the details go to a mempool. A mempool is a list of transactions waiting for confirmation.
After completing a transaction, miners form a block with the details, and the record comprising the wallet’s public key that sent the funds disappears. The network doesn’t require further verification after the network confirms the transaction.
Essentially, a digital wallet address is a public key’s hash. In other words, it’s an encrypted address public key or a cipher that works in a single direction. Deciphering the corresponding public key for the Bitcoin wallet address is already impossible.
Therefore, you must prove that you own the private key to confirm that you own the Bitcoins in a wallet. Without a private key, you can’t spend the funds in a digital wallet. Proving the address shows you own the Bitcoin in that address. Thus, if the key is not yours, even the Bitcoin in the wallet is not yours.
Proving You Own Bitcoins without Spending Them
Perhaps, you’re wondering whether you can prove that you own Bitcoins without spending them. Well, you can do that using the Sign Message feature. This feature enables you to confirm your Bitcoin possession without spending the fund or exposing the private key. Most crypto wallets provide this signing functionality. Nevertheless, check the features of your digital wallet to determine whether it has this feature before using it.
Essentially, message signing enables you to prove a particular address’ ownership. Confirming that you own a Bitcoin address demonstrates that you control the coins in it. And even some hardware wallets support this function, which is quite reliable.
This feature requires you to select an address and then type a custom message. Once you sign in, the wallet hashes the message into one number and then produces a signature with the private key. By providing a signature, custom message, and public key, anybody can decode and verify your sign message. That way, you prove that you control the private key of a Bitcoin address without revealing the private key.
A private key can help you prove your Bitcoin ownership. However, you don’t want to share a secret key because anybody with it can transfer your funds. That’s why some digital wallets provide the signing message feature. By signing a message, you prove Bitcoin address ownership and the right to manage the funds in it. Thus, you confirm that you own the private key to a Bitcoin address.
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