The Paradox of Deterministic Wallets: Why One Private Key Can’t Be Both Public and Private

When it comes to cryptocurrencies like Bitcoin, Ethereum, or others, users often rely on wallets that generate multiple private keys. This may seem counterintuitive when we consider the concept of a “private key” as a single, unique identifier for an individual’s digital identity. However, there are valid reasons why a deterministic wallet might require more than one public key.

In this article, we’ll delve into the world of cryptocurrencies and explore how deterministic wallets handle multiple private keys in relation to their public addresses.

Deterministic Wallets: What They Are

A deterministic wallet is a type of digital storage that allows users to store and manage their cryptocurrency assets. Unlike non-deterministic wallets, which use cryptographically secure pseudorandom functions (CSPRFs) to generate unique cryptographic keys for each transaction, deterministic wallets rely on a fixed set of private keys associated with specific public addresses.

The Example: Bread Wallet

We can look at the example of Bread Wallet as an illustration. When you download and install Bread Wallet, it generates a mnemonic phrase that serves as your private key. This phrase is used to derive multiple public keys for different use cases, such as sending funds between accounts or claiming rewards on various blockchain platforms.

The public address associated with your mnemonic phrase can change constantly, reflecting the dynamic nature of the cryptocurrency ecosystem. You might find yourself using one public address for a specific transaction and another for a different purpose later down the line.

Why Multiple Public Keys Are Necessary

So why do deterministic wallets need multiple public keys? The answer lies in the concept of “public addresses” and their relationship with private keys.

A public address is a unique identifier that associates a cryptocurrency asset with a particular user’s digital identity. In other words, it’s like a digital name tag or email address. When you generate a new public address using your mnemonic phrase, it becomes associated with your wallet’s identity and allows you to receive funds from others on the blockchain.

However, the process of generating a new public address is not deterministic; it involves cryptographic calculations that take into account the entire private key hierarchy. To change your public address, you need to re-derive new private keys for each corresponding public address, which can be time-consuming and may involve multiple iterations.

Why More Than One Private Key Is Needed

So, how does a deterministic wallet handle multiple private keys in relation to their public addresses? The answer lies in the way that wallets store and manage private keys. When you create a new public address, your wallet generates a new pair of private keys: one for the original mnemonic phrase (the “old” key) and another for the newly generated public address.

This ensures that there are always multiple pairs of private keys associated with each public address, even if only one is used in a given transaction. This way, when you change your public address, you can simply re-generate new private keys for each corresponding old and new keys without losing any data or compromising the security of your wallet.

Conclusion

In conclusion, deterministic wallets require multiple private keys to manage their public addresses due to the dynamic nature of the cryptocurrency ecosystem. By generating a new pair of private keys for each public address associated with your mnemonic phrase, wallets ensure that there are always multiple pairs of private keys available, even if only one is used in a given transaction.

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