Bitcoin transactions rely on cryptographic signatures to ensure security and authenticity. This guide explains how public-private key pairs work, their role in verifying transactions, and why Bitcoin’s design safeguards against fraud—even from quantum computing threats.
How Bitcoin Transactions Work
A Bitcoin transaction functions like a digital "payment slip," consisting of:
- Payment Section: Includes the sender’s signature (private key) and public key.
- Receipt Section: Specifies the amount, recipient address, and redemption conditions.
Key Security Questions for Nodes
How to prevent fake transactions?
- Bitcoin’s design can’t inherently distinguish between two valid but conflicting transactions (a flaw called transaction malleability). However, once confirmed, only one transaction can spend the funds.
How to verify signatures?
- Solved using public-key cryptography (explained below).
Public-Key Cryptography: The "Broken Seal" Analogy
Imagine carving a seal (key pair) and breaking it into two halves:
- Private Key (Half A): Kept secret; used to "stamp" transactions.
- Public Key (Half B): Shared openly; verifies the private key’s authenticity.
How Verification Works
- The public key mathematically links to the Bitcoin address (via hashing).
Nodes use the public key to:
- Confirm it matches the sender’s address.
- Validate the private key’s signature (ensuring the "seal’s cracks" align perfectly).
👉 Learn more about Bitcoin security
Why Addresses Can’t Reveal Public Keys
Bitcoin addresses are derived from public keys using hash functions—a one-way process:
- Public Key → Address: Easy (hash the public key).
- Address → Public Key: Impossible (like guessing a seal’s design from its total strokes).
Quantum Computing Risks
Even if quantum computers crack elliptic-curve cryptography (ECDSA), attackers can’t forge signatures without the public key. Since addresses alone don’t expose public keys, unused funds remain safe.
Pro Tip: Always use new addresses for transactions to maximize security.
Step-by-Step Signature Verification
Sender (Alice):
- Signs Transaction A with her private key.
- Attaches her public key and recipient’s address (e.g., "59").
Recipient (Bob):
Creates Transaction B:
- Includes public key B (matching address "59").
- Signs a string of data with private key B.
Nodes Verify:
- Check public key B’s hash matches address "59."
- Validate the signature by "reassembling" the seal (public + private key alignment).
FAQs
1. Can two valid transactions spend the same Bitcoin?
Yes (due to transaction malleability), but only one will confirm. Post-confirmation, the address is empty.
2. Why is address reuse risky?
Reused addresses expose public keys, making them vulnerable to future quantum attacks.
3. How does hashing protect addresses?
Hashing public keys creates irreversible addresses—like summarizing a seal’s strokes without revealing its design.
👉 Explore Bitcoin’s cryptographic safeguards
Key Takeaways
- Private Key: Signs transactions (your half of the seal).
- Public Key: Verifies signatures (shared half).
- Address: Hashed public key (stroke count).
- Security: New addresses = quantum-resistant safety.
By combining these elements, Bitcoin ensures tamper-proof transactions without revealing critical keys prematurely.