The core foundation of cryptocurrency security is cryptography. The Peer-to-Peer (P2P) infrastructure that gives cryptocurrencies their decentralized, safe, and essentially anonymous character is created and secured by it.
To help you better understand what makes cryptocurrencies work, we thought it would be a good idea to examine the art and science behind cryptography in the context of cryptocurrencies.
What Is Cryptography?
Suppose you and your buddies used a coded language where you would tack on extra letters or syllables to words to make listeners guess what you were saying. Unintentionally, you were employing cryptography.
Cryptography is known as the science of encoding and decoding signals so that only the recipient can comprehend what is being sent. Over time, it has found a variety of practical uses, but maybe none more pervasive than digital security.
For example, emails and SMS utilize cryptography to ensure that the message cannot be read even if it is intercepted. It accomplishes this by converting plaintext, which can be read and understood with ease, into unintelligible ciphertext using a cipher. All but the receiver can only make out nonsense. This is so that only they can decipher or decrypt it since only they have a copy of the cipher.
Cryptography protects participants and transactions in the context of cryptocurrencies, prevents coin duplicate spending, and enables all of this to take place without the need for a centralized authority (like a bank or government) to regulate the system.
Cryptographic Methods
To maintain security and integrity, cryptocurrencies employ numerous tailored variants of the following three primary cryptographic techniques:
Cryptography using symmetric encryption
This isn’t used very much in the core programs because it is straightforward and quite trivial to crack.
In this case, the data has been encrypted and decrypted using the exact same code, and both parties have copies of the same cipher. It implies that no one listening in can decipher the message. They would only need to decipher one if they were determined to decipher the entire encryption.
Cryptography using asymmetric encryption
This technique uses one key for encryption and the other for decryption.
Senders and receivers can avoid having to disclose the encryption to one another. Instead, an algorithm generates two keys and transmits one to the sender and one to the receiver. Only the recipient can decrypt it, and only the sender can encrypt it.
Hashing
Cryptographic hash functions utilize difficult mathematical techniques to encrypt data in a way that prevents reverse engineering. This is particularly helpful for turning private keys into public keys and ensuring that public and private keys are matched.
In order to protect the integrity of the keys, public key encryption, a type of asymmetric encryption cryptography, is frequently used in cryptocurrency transactions.
Encryption of Public Keys
All users of the Bitcoin network receive a private key, which is effectively an extremely secure password from which a connected public key is cryptographically generated.
Your public key is the only piece of information someone needs to send you Bitcoin, so you may freely share it with anyone. But the private key is necessary in order to access that money. The fact that Bitcoin has a solution to the double-spend issue is part of what makes it innovative.
Your private key is used to produce your public key through a process known as “hashing,” which entails running a string of data through an algorithm. No one will be able to deduce your private key from your public key since it is very difficult to reverse this procedure. The network is aware that your Bitcoins belong to you and will continue to do so as long as you have access to your private key since your public and private keys are connected.
The irreversibility of Bitcoin transactions is another drawback of eliminating a middleman (after all, there is no credit card company to call if you make a mistake). Permanent transactions are a crucial component of the solution to the double spend issue. Hence this is a feature rather than a defect.
Takeaways
- The core foundation of cryptocurrency security is cryptography.
- Cryptography is known as the science of encoding and decoding signals so that only the recipient can comprehend what is being sent.
- Cryptography protects participants and transactions in the context of cryptocurrencies.
- Your public key is the only piece of information someone needs to send you Bitcoin, so you may freely share it with anyone.
- Your private key is used to produce your public key through a process known as “hashing,” which entails running a string of data through an algorithm.