Wallets, Keys & Transactions

Time to get practical. Today we're covering the stuff that actually lets you use blockchain: wallets, keys, and transactions. This is also where most beginners make costly mistakes — so pay attention.

The Key Pair: Your Blockchain Identity

Everything in crypto starts with a key pair: a private key and a public key. They're mathematically linked through elliptic curve cryptography.

• Private key — a random 256-bit number. This is your master secret. Anyone who has it controls your funds. Period.
• Public key — derived from the private key using a one-way mathematical function. You can freely share it.
• Address — derived from the public key (usually by hashing it). This is what you give people to receive funds.

Private Key  →  Public Key  →  Address
(secret)        (shareable)     (your "account number")

The arrows are ONE-WAY:
  ✓ Private key → Public key (easy math)
  ✗ Public key → Private key (computationally impossible)

Wallets: Not What You Think

Here's a common misconception: your crypto wallet doesn't actually hold any coins. The coins always live on the blockchain. Your wallet is really just a key manager — it stores your private keys and uses them to sign transactions.

Types of wallets:

• Hot wallets (software) — apps like MetaMask, Trust Wallet, or Phantom. Connected to the internet. Convenient but more vulnerable.
• Cold wallets (hardware) — devices like Ledger or Trezor. Keep keys offline. Much more secure for large amounts.
• Paper wallets — your keys printed on paper. Old-school and risky (fire, water, losing it).
• Custodial wallets — an exchange (like Swyftx or Coinbase) holds your keys. Easiest, but "not your keys, not your coins."

Seed Phrases: The Master Backup

When you create a wallet, you're given a seed phrase (also called a mnemonic or recovery phrase) — usually 12 or 24 English words.

abandon ability able about above absent absorb abstract
absurd abuse access accident account accuse achieve acid

This phrase is a human-readable encoding of your master private key. From these words, the wallet can derive every key and address you'll ever use (via a standard called BIP-39/BIP-44).

Digital Signatures: Proving Ownership

When you send crypto, you don't physically "move" coins. You create a transaction — a signed message saying "send X coins from address A to address B" — and digitally sign it with your private key.

The signature proves:

1. Authentication — you own the private key for the sending address
2. Integrity — the transaction hasn't been tampered with
3. Non-repudiation — you can't claim you didn't send it

Anyone can verify the signature using your public key, but they can't forge it without your private key.

Anatomy of a Transaction

Here's what an Ethereum transaction looks like under the hood:

{
  "from":     "0xYourAddress...",
  "to":       "0xRecipientAddress...",
  "value":    "0.1 ETH",
  "gas":      21000,
  "gasPrice": "30 gwei",
  "nonce":    5,        // your 6th transaction
  "data":     "0x...",  // empty for simple transfers
  "signature": {
    "v": 28,
    "r": "0x...",
    "s": "0x..."
  }
}

The nonce prevents replay attacks — each transaction has a sequential number, so the same transaction can't be submitted twice.

Hands-On: Your First Transaction

Ready to try it? Here's a safe way to practice with zero risk:

1. Install MetaMask — the most popular browser wallet (metamask.io)
2. Switch to a testnet — go to Settings → Networks → select "Sepolia" or "Goerli"
3. Get testnet ETH — visit a faucet like sepoliafaucet.com
4. Send a transaction — create a second account in MetaMask and send some test ETH between them
5. View on Etherscan — paste the transaction hash into sepolia.etherscan.io to see it on-chain

Congratulations — you just interacted with a decentralized network. No bank, no middleman, no permission needed.