Diversification reduce reliance on any single market, ensuring stability during downturns. Here are the top 5 ways to diversify your portfolio.

Imagine watching the market crash while your portfolio stays steady — not because you predicted the dip, but because you built a strong defense against it. 

 is a time-tested financial safeguard in unpredictable markets. By balancing various assets, such as crypto, commodities, 

 and international stocks, investors can weather 

 and seize opportunities. So, how do you diversify effectively without overcomplicating things? This article explores the top expert strategies, and some common pitfalls to avoid.

 strategy that spreads investments across different asset classes, sectors or countries to reduce exposure to any single asset or risk. This approach aims to stabilize returns by cushioning the impact of market volatility on your overall portfolio.

Why is portfolio diversification important?

The age-old advice not to “put all your eggs in one basket” holds true when it comes to investing, and it’s a simple but powerful way to protect your wealth. Diversification helps safeguard your capital by spreading your investments across different assets so that when one underperforms, others may help offset the loss. This strategy is especially important for people nearing retirement, or for anyone who values financial stability.

By investing across various asset classes — such as stocks, bonds and real estate, as well as different industries and geographic regions — you build a portfolio that’s more resilient to economic ups and downs. But beyond just reducing risk, diversification often leads to better risk-adjusted returns and less day-to-day volatility, for an investment experience that’s less stressful overall. Moreover, because not all investments will dip at the same time, investors don’t continually have to monitor everything in their portfolios.

Diversification can also help guard against inflation, thanks to assets that tend to perform well when prices rise. At the same time, it opens the door to opportunities in growing markets, all while keeping your investment approach balanced and aligned with your long-term financial goals.

Top 5 tips for diversifying your portfolio

Here are five smart ways to diversify your investments and protect your future returns.

Tip 1: Spread investments across asset classes

Spreading your investments across different asset classes, such as stocks, bonds, real estate, cryptocurrencies and commodities, helps ensure your portfolio isn’t overly exposed to the risks of any single market segment. This makes your investments more resilient. Different assets often react differently to market conditions, so when one asset underperforms, others may perform better, balancing your overall returns (as well as your risks).

Assuming you invest solely in stocks, and the stock market declines, your entire portfolio may suffer. However, if you also hold bonds, which often perform well when stocks decline, any blow to your portfolio can be softened.​

Don’t just buy one type of stock or bond. Within each asset class, invest in a mix of sectors (such as technology, healthcare and energy), company sizes (large-cap, mid-cap and small-cap) and styles (growth, value and dividend). This approach further reduces the risk that poor performance in one area or industry will drag down your entire portfolio.

If you invest heavily in the technology sector and it experiences a downturn, your portfolio could suffer accordingly. Diversifying into other sectors like healthcare or consumer goods can help balance your investments’ performance.​

Tip 3: Low-cost index funds and ETFs for instant diversification

 (ETFs) offer a ready-made way to achieve diversification. They provide exposure to a broad range of assets or sectors, often at a lower cost than actively managed funds. This approach simplifies diversification, and can be more accessible for individual investors, especially beginners. It's an efficient way to diversify quickly and easily, as each fund typically holds dozens or even hundreds of underlying securities.

For instance, investing in an S&P 500 index fund gives you exposure to 500 large US companies, providing instant diversification across various industries.​

​Expanding your portfolio to include international assets can enhance diversification and provide exposure to growth opportunities beyond your home country. Investing globally can help mitigate risks associated with domestic economic downturns, as different regions may experience varying economic cycles.​

 their US counterparts in the first quarter of 2025. This outperformance was attributed to strong corporate earnings, increased defense and infrastructure spending in Europe, and the absence of direct US tariffs targeting European goods. Despite initial skepticism, European stocks rose by 10–12%, even as US markets declined somewhat, thus helping to stabilize global portfolio returns for investors with international diversification

However, investors must be mindful of currency exchange risks. Fluctuations in exchange rates can impact the value of international investments. For instance, if you invest in a European company and the euro depreciates against the US dollar, the value of your investment in dollar terms may decrease even if the company's performance remains strong.

Diversification isn’t a one-time task. Over time, some investments may grow faster than others, skewing your original allocation. Regularly reviewing and rebalancing your portfolio ensures it stays aligned with your 

 and investment goals, maintaining the benefits of diversification while improving long-term performance.

Let’s say your target allocation is 60% stocks and 40% bonds, but stocks perform well and grow to 70% of your portfolio. In this case, rebalancing would involve selling some stocks and buying bonds to return to your original allocation.​

Common portfolio diversification mistakes to avoid

Avoiding these common diversification mistakes can help you build a stronger, more resilient portfolio:

How to diversify your portfolio with Bybit

Bybit is a leading crypto exchange that offers a wide range of products designed to help you diversify across cryptocurrencies, traditional assets and innovative financial instruments. Following are some of the many products and services that Bybit offers.

Portfolio diversification is a key strategy for reducing risk by spreading investments across different asset classes, sectors and regions. Achieving this goal, however, requires a balanced and disciplined approach to ensure resilience and long-term growth. Bybit helps simplify this process with powerful tools like MT5 trading, Copy Trading and Structured Products. These tools allow investors to diversify their portfolios more effectively, providing access to diverse markets and strategies while also minimizing risk. 

Beginner

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Top 5 tips to diversify your portfolio

Obol Collective (OBOL) enhances Ethereum staking with distributed validators, reducing risk, slashing penalties, and entry barriers for smaller stakers.

The Ethereum blockchain has crashed!" — This is a news piece that has never been reported and will, hopefully, never see the light of day. Although several other blockchain networks have experienced significant outages or total breakdowns, a network failure of any appreciable proportions has never occurred in the history of 

 (ETH). A large part of the blockchain's stellar security record is due to its global and well-decentralized network of validator 

However, despite boasting excellent decentralization properties, Ethereum does have areas to improve upon in its validation and 

 mechanisms. First, running a full validator node on the network is financially prohibitive for smaller individuals and entities, as the blockchain requires a stake of 32 ETH (around $84,500 as of May 14, 2025) per each full validator. Secondly, there’s always a risk of individual validators, even the largest ones, being hacked. Finally, technical failures may lead to slashing penalties for validators, and too many instances of such slashing can undermine trust in the blockchain’s security model.

Obol Collective (OBOL) is a decentralized platform based on 

 (DVT), which aims to solve the vulnerabilities of Ethereum validation and staking. Leveraging DVT, Obol lets multiple nodes run as a single validator, splitting both the processing load and slashing risks. By distributing responsibility across numerous participants, Obol effectively eliminates single points of failure and enhances the overall resilience of Ethereum’s staking infrastructure. Importantly, Obol’s use of DVT reduces entry barriers to Ethereum staking for smaller entities — individuals or small organizations — as they can team up and pool their resources to act as a single validator.

 (OBOL), a provider of decentralized infrastructure, enables multiple parties to jointly run Ethereum validators in a secure and fault-tolerant fashion. 

At the core of Obol’s product offering is DVT — a technology that splits all the functionalities of a single validator on a 

 (PoS) network between multiple (potentially many) individual nodes. These nodes share not only processing responsibilities, but also risks and rewards.

Obol’s infrastructure project is most typically used by 

 (RPL), to support their operations. While these protocols handle user funds and front-end functionality, Obol provides its DVT-based validator set to help support their Ethereum-based liquid staking.

Obol offers numerous benefits to liquid staking protocols and validator entities. It creates access to Ethereum staking for smaller, aspiring validators. Such entities often struggle with the financial requirement of staking no fewer than 32 ETH to run a validator. By joining an Obol cluster, which lets multiple nodes act as a single validator, these smaller players can participate in Ethereum staking by splitting the 32 ETH requirement between them.

Additionally, Obol’s DVT-based node splitting for validators provides better protection against the risk of slashing, which results in financial penalties or even suspension for the offending node. Slashing occurs on Ethereum and other PoS chains when a validator fails to fulfill their responsibilities on the network. It may happen due to willful misbehavior, or it could often be the result of honest mistakes or misconfigurations. For instance, a failed internet connection may keep a validator node offline for too long, resulting in slashing. Thanks to Obol's DVT, the other nodes can still keep the cluster functioning if one node fails.

The Obol project was conceptualized and developed by Obol Labs, an Illinois (US)–based company founded in 2021 by Oisín Kyne and Collin Myers, and the platform is supported by the nonprofit Obol Association. The first distributed validator on Ethereum was launched by the project in late 2022. As of this writing in May 2025, Obol Collective has established itself as the largest provider of DVT services in the blockchain industry.

Using Obol, developers and operators can create distributed validator (DV) clusters, each one acting as a single full validator on Ethereum. There are two options for creating clusters within Obol Collective: 

When one operator creates a cluster, they can assign multiple nodes to it, creating a distributed setup that avoids a single point of failure. It's recommended that the cluster nodes be hosted on different machines, although it's also permissible to use a single machine for all of the nodes. Using one machine for all cluster nodes creates a significant vulnerability, due to centralization of resources.

To automate and manage proper splitting of validator rewards and staking allocations, Obol uses a set of 

. These are noncustodial and normally immutable, meaning that the share allocations rewarded to nodes within a DV cannot be changed after the cluster’s deployment. However, one specific type of Splits contract, a 

 splitter contract, does have the functionality to update split percentages at a post-deployment stage. 

Obol Splits technology has been integrated into some of the leading liquid staking and restaking protocols — Lido and 

 (EIGEN) — to help DV operators service these platforms.

Charon is middleware developed by Obol to allow any Ethereum validator to operate as part of a DV. It acts as the main layer, allowing the platform to offer DVT-based services. Using Charon, operators can create a Byzantine fault tolerant (BFT) cluster and coordinate their work on the network as a single entity. Byzantine fault tolerance allows Obol clusters to operate and process Ethereum blocks even if some of the nodes within the cluster behave maliciously, or fail due to technical issues.

Obol also offers a staking-as-a-service (StaaS) product that lets users access staking opportunities without having to run the actual node hardware, further reducing barriers to end users for entry to Ethereum staking.

Obol’s DV Launchpad lets users configure and launch their clusters. Step by step, the launchpad walks users through all of the procedures required to create their own DV together with their peers. For less technically minded users, the launchpad is an ideal way to set up clusters using its graphical interface.

The platform's native token, OBOL, is an 

 asset issued on the Ethereum blockchain. OBOL was launched in January 2025, more than two years after Obol began offering its DV services. Upon launch, OBOL tokens remained locked, i.e., non-transferable. On May 7, 2025, this restriction was removed, making OBOL publicly available and freely tradable. Due to the lockup period, many online sources report May 7 as the token's actual launch date.

The OBOL token has several key functions on Obol Collective. One of these is 

, as OBOL token holders can delegate their voting power to designated delegates who participate in votes in the Token House, a governance platform where proposals regarding Obol Collective's direction and rules are introduced, considered and voted on.

Delegates also vote on funding allocations to support ecosystem growth under Obol’s Retroactive Funding (RAF) program. As such, OBOL holders may participate in funding decisions through their chosen delegates.

Another utility function of the token is that of staking. You can earn OBOL rewards through OBOL Incentives, a community incentives program that lets you stake your ETH on DVs. In 2025, 12.5 million OBOL are being distributed as staking rewards under this program.

The OBOL token may also be used for various DeFi use cases, e.g., within lending protocols and restaking platforms, as well as for increasing liquidity on DeFi protocols by contributing to their liquidity pools.

OBOL's total and maximum supply is 500 million, with just over 98.7 million tokens in circulation. Of the total supply amount, 7.5% was distributed via a retroactive 

 that rewarded certain ecosystem community members, such as developers and users who contributed to testnet and Alpha and Beta Mainnet operations.

The chart below shows the allocation shares of the token’s total supply.

The OBOL token is available on Bybit both as a 

. You can also take advantage of the Bybit event dedicated to the OBOL token to grab a share of the 

To join the event, deposit or trade OBOL on Bybit's Spot market, and stake between 200 and 1,000 OBOL using Bybit’s 15-day Fixed Savings plan to earn a 25% APR. Also, VIP users can enjoy staking limits of 2,000 OBOL and an exclusive 50% APR, while new users can access up to 200% APR via a booster voucher. The event is valid till Jun 7, 2025, 12PM UTC.

As of May 14, 2025, the OBOL token has been on the market only for a week. It’s currently trading at $0.2347, 38.3% lower than its ATH of $0.3801 on May 7, 2025, and 2.1% higher than its ATL of $0.2298, registered on May 13, 2025.

Long-term price forecasts for OBOL are mostly bullish. DigitalCoinPrice 

 of $0.79 in 2027 and $1.17 in 2030, while CoinCodex 

 at around $ 0.25 in 2027 and rise to $0.86 in 2030.

Given the token's minimal market history, future price determination for OBOL is a tentative exercise at the moment. Various market forces and industry developments can influence the token's price in the future, so always conduct your 

 before deciding to invest in OBOL or any other crypto token.

As the leading provider of a decentralized operator ecosystem, Obol stands out as one of the most essential decentralized infrastructure networks in the Ethereum ecosystem, offering a truly next-gen staking and validation system and contributing to better blockchain security. Obol's DVT-based model offers slashing-resistant nodes, and helps further decentralize Ethereum’s validator system.

Distributed validators are crucial not just for decentralization, but also for better performance and security. Unlike traditional validators, they democratize access to Ethereum staking by supporting restaking-based finance applications and smaller players in the niche. Among Layer 1 blockchains, Ethereum features some of the most onerous financial requirements in order to run a full validator node. Obol Collective solves this problem using its DV model, a true innovation within the world of Ethereum.

Advanced

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Obol Collective (OBOL): Coordinating trust through collective staking

This article explores Lorenzo Protocol, how its core technology works, the utility of its native BANK token and how you can trade it on Bybit.

Bitcoin, the world’s most successful original cryptocurrency, holds the largest crypto market capitalization. However, much of its vast liquidity remains separate from the diverse yield opportunities in 

. Lorenzo Protocol is designed to bridge this gap, aiming to transform BTC from a passive store of value into a productive, yield-generating asset for both institutional and retail users.

This article explores Lorenzo Protocol, its recent evolution into an institutional-grade asset management platform, how its core technology works, the utility of its native BANK token and how you can trade it on Bybit.

 is a decentralized asset management platform that’s building an institutional-grade financial layer for Bitcoin, aiming to unlock its vast liquidity for the DeFi ecosystem. Initially focused on helping BTC holders access yield through 

 its infrastructure with the introduction of its Financial Abstraction Layer. This strategic shift positions Lorenzo Protocol as an on-chain asset management platform that’s dedicated to tokenizing financial products and delivering sustainable, real yield.

The protocol's core mission is to advance a borderless global economy by enabling Bitcoin holders and other capital providers to earn yield without sacrificing their assets’ liquidity. It seeks to connect idle capital with diverse yield strategies, including staking and sophisticated trading opportunities, making these opportunities accessible through standardized, tokenized financial products.

Who are Lorenzo Protocol's founders and investors?

Lorenzo Protocol was co-founded by a team with strong backgrounds in finance and technology. Co-founders Matt Ye, Fan Sang and Toby Yu serve (respectively) as CEO, CTO and CFO. Their collective expertise guides the protocol's development and strategic vision.

The project has garnered support from a range of prominent investors. Key backers include YZi Labs, BNB Chain, Geekcartel, NGC Ventures, HTX Ventures, ArkStream Capital, Animoca Brands and Sats Ventures. As of May 12, 2025, Lorenzo Protocol has a DeFi 

Two core components power Lorenzo Protocol’s mission to bring institutional-grade financial products on-chain: the 

The Financial Abstraction Layer is Lorenzo's core infrastructure. It tokenizes centralized finance (CeFi) strategies and makes them usable within DeFi. The FAL packages complex operations, such as custody, lending and trading, into simple, tokenized products accessible via standardized vaults and modular APIs. This allows financial access platforms (like neobanks or PayFi apps) to integrate verifiable yield modules without building complex financial logic themselves. 

An example of a product powered by FAL is the On-Chain Traded Fund (OTF), which tokenizes yield strategies (fixed yield, principal protection, etc.) into a single tradable ticker, similar to traditional 

The Bitcoin Liquidity Layer specifically focuses on integrating BTC into DeFi. Recognizing that a vast amount of Bitcoin sits idle, this layer provides infrastructure for issuing various BTC-native derivative tokens. These include stBTC, a liquid staking token representing Bitcoin staked via 

 (WBTC) standard designed for seamless use across Lorenzo's ecosystem and DeFi. This layer aims to turn passive BTC into active capital for 

BANK is the native governance and utility token of the Lorenzo Protocol. It plays a crucial role in the ecosystem's operation and long-term alignment. The key use cases of BANK include:

As of May 12, 2025, according to CoinGecko data, 

The initial circulating supply was 20.25% of the total, with 8% of the total supply reserved for an initial community 

. BANK’s token unlock schedule is designed for long-term alignment, with no token unlocks for the team, investors, advisors or treasury in the first year post-

Bybit has recently expanded its offerings on its user-friendly and intuitive cryptocurrency exchange by 

. This allows traders to gain exposure to BANK's price movements with leverage.

The BANKUSDT Perpetual contract is featured in Bybit's Innovation Zone, which provides access to new and innovative token pairs. Users can trade this contract with up to 50x leverage.

You can trade the BANKUSDT Perpetual contract on Bybit once you have a verified account with deposited funds. Here's how to get started, in four simple steps:

Intermediate

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Lorenzo Protocol (BANK): Unlocking institutional Bitcoin liquidity and yield

In this article, we’ll dive into the Pundi X ecosystem and learn how each product works, examine the PUNDIX token and share how to trade PUNDIX on Bybit.

Pundi X, founded in 2017 by Zac Cheah and Pitt Huang, is a blockchain-based payment solution designed to simplify cryptocurrency transactions, making them as seamless as traditional retail payments.

With an ecosystem of tools like the XPOS point-of-sale device, XWallet mobile app and XPASS virtual card, Pundi X aims to bridge the gap between the digital and physical.

Pundi X is a blockchain-based payment solution aimed at making cryptocurrency transactions as straightforward as traditional retail payments. Founded in 2017, it bridges the gap between digital assets and retail, enabling consumers to buy, sell and spend crypto in physical stores.

The project initially launched with the NPXS token in 2018, later rebranding to PUNDIX in 2021 via a 1000:1 token swap intended to reduce supply and strengthen its brand identity.

Pundi X was co-founded in 2017 by Zac Cheah and Pitt Huang.

The project is backed by a mix of institutional investors and blockchain pioneers, supporting its mission to make crypto payments mainstream.

The Pundi X ecosystem is designed to make crypto transactions as seamless as traditional payments, bridging the gap between blockchain and retail. 

Pundi X Chain is a multichain blockchain network designed for high-speed, low-cost retail transactions. It’s optimized to support the Pundi X ecosystem, including XPOS, XWallet and XPASS, providing a scalable infrastructure for global merchants looking to integrate blockchain technology.

PUNDIX is the native utility token of the Pundi X ecosystem. It supports transactions, rewards and network security. Initially launched as NPXS in 2018, it rebranded to PUNDIX in 2021 with a 1000:1 token swap.

PUNDIX is available for trading on multiple leading exchanges, including Bybit, which recently listed the PUNDIX/USDT Perpetual contract with up to 25x leverage. This listing provides traders with enhanced flexibility for leveraged trading.

Trading PUNDIX on Bybit is straightforward. Simply use the following step-by-step guide:

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Pundi X (PUNDIX): AI-powered web3 payment ecosystem

Blockchain

The public and private keys are a key pair that is obtained by using an encryption algorithm. But are they different? Learn more here.

Public-Keys-vs.-Private-Keys.jpg

Cryptography is the core of cryptocurrency, and without it, none of the transactions will be secured, nor the integrity of any information is upheld. Think of it this way, when you perform peer-to-peer (P2P) transfers, your data may be exposed without secure encryption, and anyone can attempt to read the data structure without knowing the data has been tampered with. That’s exactly why private and public keys are so essential to authorize these transactions.

While both the public and private keys strive to secure a transaction, they are distinctively different, corresponding with their purposes. When comparing them side-by-side, a 

is used to verify a transaction after a transaction has been requested. Commonly a public key is also translated as an ‘address’ to receive cryptocurrencies. Whereas a 

 that is associated with a cryptocurrency account focuses on authorizing the transaction.

Typically, a private key is not shared and only the owner should know it. In another word, if anyone granted access to your private key will have the authority to deplete your asset in a wallet. 

That is why you must understand what they are, why they are so important. Perhaps, to learn how not to be the 

is basically used to decrypt the messages encrypted in a complex mathematical algorithm within the cryptography methodology. While a public key can be widely distributed, a private key used in the crypto context is meant to be kept discretely as a password to safeguard your digital assets.

Usually, these private keys vary depending on the different 

, although almost all of them use 256-bit encryption. That includes BTC, ETH, LTC, and more. For example, a 

0x01 and 0xFFFF FFFF FFFF FFFF FFFF FFFF FFFF FFFE BAAE DCE6 AF48 A03B BFD2 5E8C D036 4140, representing nearly the entire range of 2256-1 values.

3048 0241 00C9 18FA CF8D EB2D EFD5 FD37 89B9 E069 EA97 FC20 5E35 F577 EE31 C4FB C6E4 4811 7D86 BC8F BAFA 362F 922B F01B 2F40 C744 2654 C0DD 2881 D673 CA2B 4003 C266 E2CD CB02 0301 0001

The key is a sequence of random symbols available to any person (public key) or known only by its owner (private key). The public key is used for encryption, but it is only a private key that can help one to decrypt the information. That said, it is possible to find out a public key if you know a private key, but it is relatively impossible to find out a private key with a public key.

Cryptocurrency wallets are excellent examples of public and private keys utilization. When considering wallets, a public key is a user’s address, and it gives other network participants a point of access to send tokens to this wallet. But if a user wants to send crypto from one to another, they’ll need their private keys to confirm the transaction. 

Just like logging into your email, you’ll need a password. The email address is a fixed point for other email network participants to send messages. While the password is required to get full access to the email account.

However, for the longest time, symmetric encryption was the primary encryption type where every message was encrypted and decrypted with the same code (key). Still, it raises serious doubts about its security. Thus, asymmetric encryption is designed to meet these security challenges with a pair of keys (one public and one private) used separately to encrypt and decrypt messages.

Unlike symmetric encryption with one key to encrypt and decrypt information, public and private keys must “match” the encrypted data. They are generated and used simultaneously. But what is it about?

Cryptography Methods Used in Cryptocurrencies

, there are several methods, and that includes symmetric encryption, asymmetric encryption, and hashing.

 to encrypt transactions between accounts. To ensure the encryption is secured, random letters and numbers are added to the stored value. That is mainly to mitigate the risks of easy decryption. While the stored value refers to digital fingerprint or hash value once the conversion is completed. 

It is one of the most popular, easiest, yet effective encryption. The messages are encrypted with a 

 in which the key could be identical or different between parties simultaneously. It is then transmitted to a recipient and to be decrypted once it is received and verified. 

Unlike symmetric, the encryption and decryption of messages usually involve two keys— 

Public keys are used to verify a transaction after a transaction has been requested. Whereas a private key is to decipher the message or transaction. The concept is to uphold the transaction’s authenticity and to mitigate the possibility of security downfall. That also means, if the private keys are misplaced, there are no ways to find them. Similarly, if the private key is exposed, any transactions can be granted, and it’s unretrievable because it’s authorized. 

Public key cryptography has two primary use cases— identification and confidentiality. In simple words, it can be described in the following way: 

Let’s say, Alex (sender) wants to send 1 BTC to Jane (recipient). He knows her public key and uses it to encrypt the transaction. Jane receives the transaction and decrypts Alex’s transfer of 1 BTC with her private key. Jane should be the only person who can authorize the transaction as nobody else knows her private key. 

When it comes to cryptocurrency, a private key is what you own physically. It proves your rights to manage your digital assets and to authorize any transactions. Whoever knows this key can spend the associated funds.

The Differences Between Public Keys and Private Keys

Both private and public keys’ goal is to verify that a given transaction was spent by the party who signed it and not forged out of thin air. Though both types of encryption cater a similar purpose, they differ in many ways. Here’s what you need to understand:

In public-key encryption, there must be two separate keys for encryption and decryption. The private key is for the owner only, while the public key is available to anyone. One key is required for transmission between the two parties involved in symmetric key cryptography. The same private key is used both to encrypt and decrypt the information. It is shared between the sender and receiver of an encrypted message.

The private key mechanism is much faster than the public key. That’s because a private key requires only one key while the public key requires two keys.

The private key is kept secret and not disclosed to anyone apart from the wallet’s owner. Once lost, the private key is impossible to restore, and the encrypted file becomes unusable. Typically, these keys are difficult to remember as it involves complex numberings. Still, the safety of private keys is entirely up to its owner. That is why the best method to keep your private keys safe is an offline storage device. On the other hand, the public key is open to all users and should be available upon search. It is unlikely to lose the public key.

The web content can be digitally signed with the user’s private key and verified by the user’s public key. That makes it easy to identify the message sender in the network and confirm that a trusted identity sent a message.

The digital signature provides certain security benefits such as:

The content is encrypted with the user’s public key and can only be decrypted with its private key. That is the only way to convert the message back.

Encryption provides the following security benefits:

Public key cryptography is used in a large number of protocols and data formats, which are implemented by a vast range of applications and system software. That includes the SSL protocol, SSH, digitally signed PDF files, OpenPGP, S/MIME, etc. It is widely applied to software programs, such as browsers, to ensure secure connections in insecure networks. Asymmetric cryptography forms the base for the blockchain algorithm, which constitutes a base for all cryptocurrencies.

Benefits and Limitations of Public and Private Key Encryption

There is no perfection for any methodologies or encryption, and that includes the public and private keys. Here are the pros and cons:

Adopting private key encryption technology is an excellent way for any business to protect important information from prying eyes. Regardless if you choose a symmetric or asymmetric encryption method. They both have their advantages and disadvantages as any other technology.

However, symmetric encryption is faster and easier to carry out. The system performs a single, reversible mathematical equation to encrypt or decrypt a file. That is why this method requires fewer computer resources than asymmetric encryption.

Simultaneously, while private key encryption provides a much higher security level, it still has some setbacks. The main problem associated with this method is the problem of key transportation. It involves insecure forms of communication to transmit the key. It’s risky to allow third parties to be granted access to the key that unlocks the data. This method cannot guarantee the origin and authenticity of the message and may cause some problems if there is a dispute or doubt.

If a user wants to segregate the data or funds among groups, it is necessary to generate and manage multiple private keys. Too many keys are not so convenient, and a new shared key with every different party may result in increased insecurity.

The disadvantages of this method are associated with some severe weaknesses. First, the loss of the private key should lead to dismal consequences. That means that no one can ever decrypt the received data. In terms of cryptocurrency, the wallet owner will not be able to get access to his or her wallet if the private key is lost.

The choice of the encryption method varies depending on your preference and convenience. Symmetric encryption is beneficial if you value speed and data protection over the rest. For example, the Advanced Encryption Standard (AES) adopted symmetric encryption algorithm is used by many big companies and entities like Apple and Microsoft. 

Besides, if you focus on data storage, symmetric encryption is ideal. It works well if the encrypted data is stored on a device and that data is not being transferred. 

Asymmetric cryptography will be your preferred choice if increased security is the priority over speed and computing power. It is also important when identity verification is required, as symmetric cryptography doesn’t support it. Blockchain technologies rely on identity confirmations to authorize transactions. Thus, crypto traders and investors would prefer this.

As we move towards the digitized sphere, data storage and security have increasingly become important. Public key encryption helps users maintain reasonable security practices as nobody knows the private key paired with the open public key. It is advantageous when to avoid potential interceptions and cyber frauds. However, all you need is to ensure your private key secure and inaccessible to others.

To start trading is hard, but securing your funds is even more challenging. Bybit urges you to secure your data and learn about the importance of respecting privacy, safeguarding data, and enabling trust.

Public Keys vs. Private Keys: What Is It & How Do They Work?

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Public Keys vs. Private Keys: What Is It & How Do They Work?

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Compete for 2,500 USDT USDT Every Week

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