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A: If blockchain is so important to verifying that crypto transactions are legitimate, how can off-chain transactions even happen?
B: I already told you. You swap encryption keys.
A: That means almost nothing to me.
B: All cryptocurrency is encrypted: that’s why you call it “crypto” currency. The encryption has a public key, which everyone can see, and a private key, which only the owner has. So if I give you the private key for a crypto coin, you are effectively the owner of that crypto coin, because you have the private key.
B: So if you want one of these Companies That Should Not Be Described As Banks Under Any Circumstances to manage your cryptocurrency transactions, you give them all your private keys, and they trade the keys.
A: Doesn’t that mean someone can just steal your private keys off one of these company servers and then poof, all your cryptocurrency is gone?
B: Yes. In fact, that’s already happened! People tend to store their private keys in password-protected programs called “crypto wallets,” and there are already incidents where crypto thieves guess weak crypto wallet passwords and empty them out.
A: That sounds terrible and horrifying.
B: Which means we’re finally ready to talk about NFTs!