Public and private keys
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Every account on a distributed ledger is controlled by a key pair. The private key is a very large random number. The public key is derived from it by a one-way mathematical function. The address that appears on the ledger is in turn derived from the public key. Anyone may send tokens to an address. Only the holder of the corresponding private key can sign a transaction that moves tokens away from it. Signing proves control without revealing the key itself.
This is the single most important technical fact in the entire book. The private key is the only thing that gives factual power of disposal over a token. There is no register of owners, no court order that the network will obey, and no central operator who can reverse a transfer. A person who knows the key can spend. A person who does not cannot, whatever a contract or a judgment says. Swiss private law has built its entire analysis of crypto assets on this fact, which is why the Federal Council's 2018 report concluded that pure payment tokens are neither things under Art. 641 ff. of the Civil Code (CC; ZGB) nor claims, but positions of factual control that the law attaches consequences to.1
Singapore's courts reached a different conceptual destination from the same starting point. In ByBit Fintech Ltd v Ho Kai Xin the High Court held that USDT is a thing in action and therefore property capable of being held on trust, reasoning from the holder's ability to exclude others through control of the key.2 The technical fact is identical in both legal systems. What differs is the doctrinal box into which each system places it. Part D, Chapter I and Part J, Chapter I take the comparison further.
Seed phrases, derivation and the practical meaning of "one key"
Modern wallets do not store one private key. They store a seed, usually displayed to the user as twelve or twenty-four English words, from which an unlimited number of key pairs is derived deterministically under the BIP-32 and BIP-39 standards. Whoever holds the seed holds every address derived from it on every supported chain. For an executor, a liquidator or a prosecutor, this means that recovering one seed phrase may yield control over hundreds of addresses, and that an inventory of a deceased's or a bankrupt's holdings must start from seeds and not from individual addresses.3
Example
A Zug-based founder dies in 2026 leaving a hardware wallet and a sealed envelope with twenty-four words. His will appoints an executor in Zürich and leaves "my Bitcoin" to his daughter. The executor who treats the words as a password to one account will miss the Ether, the stablecoins and the tokenised shares held under other derivation paths from the same seed. The executor who understands derivation will scan every common path across every major network before preparing the inventory required by Art. 553 CC. Part D, Chapter VIII and Part P, Chapter VIII return to the planning side of this problem.
Notes
- Federal Council report of 14 December 2018, section 5.1.1 (legal classification of tokens; no property right in the sense of the Civil Code; factual power of disposal as the connecting factor). The civil-law consequences are developed in Part D, Chapter I. ↩
- ByBit Fintech Ltd v Ho Kai Xin [2023] SGHC 199 (Philip Jeyaretnam J), available on eLitigation as 2023_SGHC_199; the property analysis is in the section of the judgment on whether USDT is capable of being held on trust. ↩
- Bitcoin Improvement Proposals BIP-32 (Hierarchical Deterministic Wallets, 2012) and BIP-39 (Mnemonic code for generating deterministic keys, 2013), github.com/bitcoin/bips. ↩
For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.