The word “cryptocurrency” itself implies the defining role of encryption in this type of monetary system. All the sensitive data stored and managed on-chain is encrypted and has a form of a hash (a string of randomly looking letters and numbers). Hash cannot be decoded without a private key which is used to unpack the coded data and that is why this key is private — sharing this key is risky as the data can end up stolen. This article explains what private key encryption is, how it works, and how it is different from a public key encryption.

What Is a Private Key Encryption?

Encryption is a natural way to prevent unauthorized access to private information and avoid data leaks. If the info can’t be used by thieves they won’t take advantage of stealing it. Sensitive data is secured by private key cryptography. Private key encryption (or symmetric encryption) is the type of encryption that uses a single key to encode and decode the data.

To understand this concept it’s vital to signify what is a private key. A private key is a cryptographic key needed to encode and decode information. Both symmetric and asymmetric encryption systems use private keys.

Private Key Encryption and Public Key Encryption

Types of encryption known as private key and public key encryption have only one crucial difference that makes them better fit for different purposes. These types have alternative naming – symmetric and asymmetric encryption.

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In the symmetric encryption (also known as private key encryption), the data is encrypted and decrypted via the same private key. Any person obtaining a private key can decrypt the data encrypted via symmetric encryption. Securing the private key from strangers is crucial for the safety of encrypted data.

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Asymmetric encryption (or public key encryption) requires a public key to encrypt the data and a corresponding private key to decrypt it. The public key can be shared with others without risk while the private key should be stored secretly as this key allows anyone who obtains it to access data.

No matter if you use a symmetric or asymmetric encryption-based system, a private key should be stored in a safe place as the person who has this key can read and use the encrypted data. 

Now, let’s take a closer look at both types of encryption and examine the ways they are used.

Private key encryption use the following methods of encoding the data:

Block ciphers: This method involves turning data into blocks of equal predetermined size. Block ciphers are used in Advanced Encryption Standard (AES), Triple DES, and Blowfish.

Stream ciphers: As the name suggests, stream ciphers are used during real-time encryption of data streaming (voice, video, etc).

Hash functions: This is a pretty standard encryption method used to transform various forms of digital data into a fixed-size set of characters (or “hash”). This hash allows involved parties to verify the authenticity of data and use it. Hash functions are used for public key encryption, as well. Any person interested in cryptocurrencies is familiar with a hash function called SHA-256 (utilized for Bitcoin). Another example is MD5. 

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Let’s take a look at examples of encryption methods associated with public key encryption:

Rivest-Shamir-Adleman (RSA): This encryption method named after its creators, Ron Rivest, Adi Shamir, and Leonard Adleman, is used for a variety of purposes including key transmission, digital signatures, and data encryption.

Elliptic Curve Cryptography (ECC): This encryption standard is getting increasingly popular for encoding the data, key transmission, and digital signatures.

Diffie-Hellman: This algorithm is often used for secure key exchange in messengers and VPN services.

Digital Signature Algorithm (DSA): DSA is mostly used for digital signatures and for protection of email communication and financial documentation.

Some of the most popular encryption solutions use a combination of symmetric and asymmetric encryption to ensure safe key transmission. These include such well-known protocols as Pretty Good Privacy (PGP) and Secure Sockets Layer (SSL).

Private Key Encryption Use Cases

Private key encryption is often used to protect sensitive data circulating between two parties. For instance, it protects communication in messengers such as Whatsapp, Signal, and others.

Communication between a website and its users is usually protected by private key encryption too. The encryption ensures that the website staff won’t know the password you use to login to the website. They can only see the encrypted version. Also, symmetric encryption is used for VPN servers. The symmetric encryption algorithm AES256 is used by the US government to protect classified information.

Benefits and Drawbacks

Like any technology, private key encryption has its benefits and drawbacks. Below you can see key advantages and disadvantages of private key encryption.


High performance: As private key encryption needs a single key, it is easy to implement. The systems that use symmetric encryption work faster and smoother than asymmetric encryption.

Authentication: Private key encryption solutions are good to execute authentication procedures whether it is a digital signature, a password, or anything else.

Maintaining the data integrity: Symmetric encryption allows to maintain the data integrity using message digests and through one-way hashes. These solutions help to indicate suspicious activity timely.


The main problem with symmetric encryption is that the key gets vulnerable at the stage when its exchanged between the communicating parties. The protection of data almost fully relies on this key and if it gets stolen in the moment of transmission between authorized parties, the data can get compromized. To transmit the private key safely, some use the channels protected via asymmetric encryption.

Managing a Private Key Safely

As the private key is the actual and only key to your private data, it’s crucial to keep it away from anyone else. During the key exchange with your trusted counterparts, the key is at risk of being stolen. There are some known practices to prevent that. See the most important of them below:

Store your key in a safe place. One of the best ways to ensure the private key’s safety is to store it using a hardware security module (HSM). It is an offline device that can be connected to the Internet only when the key is needed or a protected file system. Make sure that the device is located in a place where no one will take it (by accident or intentionally), it won’t be damaged, and you won’t forget where you left it. 

Only a trusted person should know where to get this key if necessary. Ensure the key rotation. If you replace an old private key with a new one regularly, it will seriously increase the security level of encrypted data.

Control access to your data. Ensure that only authorized agents can access the data encrypted with a private key. Access must require logging in and should be controlled by you.

Dispose of the private key once access to sensitive data is no longer necessary. If you keep the key that you don’t really need, you can compromize it by accident and a third party will be able to get access to your private data. To destroy the key you may use cryptographic erasure tools.


A private key encryption is one of the trustworthy types of encryption used even to protect the most sensitive governmental information. If the key is stored properly and access to it is in full control of the data owners, the private key encryption (also known as symmetric encryption) allows to store and transmit info safely and quickly and keep the integrity of data. As the key exchange moment is the time when the key is most vulnerable, many use the additional layer, a public key encryption, to protect the key exchange itself. Such popular protocols as PGP and SSL use combined public and private key encryption to ensure safety and privacy.



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