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Asymmetric key encryption is a method of encryption which uses two complementary keys — a private key and a public key. Each recipient has a private key which is kept secret and a public key which is published. A sender uses the recipient’s public key to encrypt a message. The recipient uses its private key to decrypt the message.


Commonly used public key systems encrypt relatively slowly, but are useful for digital signatures and for exchanging the secret keys used for encryption with a faster, symmetric key cryptosystem.

The initiator only needs to protect the confidentiality and integrity of his or her private key. The public key can be distributed more freely, but its authenticity must be assured (e.g., guaranteed by binding the identity of the owner to that key).


Asymmetric key encryption serves to create identities on a blockchain. A user creates two elements, a public key which helps identify their transactions on the blockchain, and a private key which is necessary to conduct a transaction with the public key. Asymmetric encryption allows for the authentication of users because only those with the private key can decrypt data encrypted with the public key or encrypt the data for public key decryption, thereby creating a signature.

The public key may be broadcast on the blockchain itself, or may be tied to an address which is broadcast instead. In some blockchain systems, the real-world identity of each address or public key is logged so that individual users may be tracked. In others, a user may be able to generate public and private keys independently and broadcast the public key or address without identifying themselves, creating a pseudonymous identity on the blockchain.

In a blockchain, the public key is used to identify a user on the blockchain and verify the resources (e.g., assets or records) tied to that user's public key or address. The resource could not be used unless the holder of the public key to which the resource is tied unlocks (or decrypts) the resource with their private key, allowing it to be transferred to another identity on the blockchain (a public key or address) and locked with that second user's private key. This transaction would be logged on the blockchain, so that other users could verify the resource has changed possession.


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