Seeds and Accounts
The starting point for everything is a seed (pun intended). To create an account with private keys and addresses you need to have a secure seed. A seed consists of 81-trytes (or less, which is not advised), and is your unique access key to your account and thus your funds. The seed has to be securely stored.
In IOTA, we provide you with 3 security levels to choose from. A security level determines the number of rounds for hashing, which means that a single seed can have 3 different accounts.
| Security Level | Security |
|---|---|
| 1 | 81-trits (low) |
| 2 | 162-trits (medium) |
| 3 | 243-trits (high) |
243-trits security is advised to be used by all exchanges. The client libraries make it possible to easily switch and choose from a security level.
Private Keys and Addresses
Private keys are derived from a seeds key index. From that private key you then generate an address. The key index starting at 0, can be incremented to get a new private key, and thus address.
It is important to keep in mind that all security-sensitive functions are implemented client side. What this means is that you can generate private keys and addresses securely in the browser, or on an offline computer. All libraries provide this functionality.
IOTA uses winternitz one-time signatures, as such you should ensure that you know which private key (and which address) has already been used in order to not reuse it. Subsequently reusing private keys can lead to the loss of funds (an attacker is able to forge the signature after continuous reuse).
Exchanges are advised to store seeds, not private keys.
If you want to have some more description and examples, please go to https://learn.iota.org/tutorial/generating-addresses-learn-the-basics