This article is a continuation of the first part, where we discussed the private key as the foundation of digital ownership.
Now we come to a frequently asked question—especially for a non-technical audience:
How is it possible for someone to receive money… without giving a name, account, or any identity?
Traditional Finance: Identity is Everything
In the traditional financial system, identity is at the center of everything.
To receive money, you must provide:
- name
- account number
- bank information
- sometimes even address and additional documents
Every transaction is always connected to an identity.
Without identity, the system cannot operate.
Blockchain: Identity is No Longer Required
Blockchain introduces a different approach.
You don’t need to provide your name.
You don’t need to disclose your identity.
What you need is only one thing:
an address
What Is an Address?
An address is a representation of a public key.
It looks like a random string of characters, for example:
0x7A3F...9cD2
For humans, this looks meaningless.
But in the blockchain system, this is the destination for sending.
Anyone who knows your address can send assets there.
Without needing to know who you are.
The Relationship Between Private Key, Public Key, and Address
From the previous part, we know that:
- the private key is secret
- the public key can be shared
From the public key, the system generates the address.
Simply put:
- private key → generates public key
- public key → generates address
All of this is done through a one-way mathematical process.
This means:
- from the private key, we can get the public key and address
- but from the address, it is impossible to get back to the private key
A Simple Analogy
Imagine the address as a delivery destination address.
Anyone can:
- see the address
- send something there
However, the address does not tell who owns it.
It does not contain:
- name
- identity
- personal information
It is just a destination.
Is This Anonymous?
Not entirely.
Blockchain is transparent.
All transactions:
- are recorded
- can be viewed
- can be analyzed
But the identity behind the address is not immediately visible.
This concept is called pseudonymous.
It means:
- activity is visible
- identity is not directly known
Implications for Business and Modern Systems
This concept opens many new possibilities:
- Payment systems without revealing full identity
- Cross-border asset transfers without intermediaries
- Management of digital assets without dependence on institutions
However, on the other hand, it also presents challenges:
- how regulations are applied
- how identity is verified if needed
- how to balance privacy and transparency
Conclusion
In traditional systems, identity is the primary requirement to transact.
In blockchain, transactions can occur without direct identity.
All that is needed is an address.
And behind that address, there is one thing that remains the center of everything:
a private key
In the next part, we will discuss how all these transactions are recorded and protected against alteration.
Why blockchain is often called a “digital ledger,” and how this system can be trusted without a central party.
That is where the concepts of ledger and block begin to play an important role.
About the Author
Nitza Alfinas Rahman is a technology practitioner with over 18 years of experience in software engineering and 10 years in blockchain.
Stay tuned for this series to understand how blockchain, Web3, and AI will change how we build and manage businesses in the future.