Cryptocurrencies have been gaining recognition quite rapidly and have already fascinated the youth. People are investing enthusiastically in numerous Bitcoin mining and the crypto market is flooding with excited and curious individuals.
Cryptocurrencies have gained popularity also due to their amazing features like security, decentralization, and anonymity. Itsupports peer-to-peer architecture and makes transactions more secure and easier. But how do these cryptocurrencies maintain such high-level security and privacy?
This is made possible with cryptography. Many cryptocurrencies like Bitcoin and Ethereum use cryptography to ensure secure transactions and individual privacy.
Cryptography ensures the fidelity and security of cryptocurrencies. Cryptography, the word came from a Greek word. The Greek word was‘Kryptos’and it means hidden or secret.It actually came from writing or writing secretly in old Greek. So, the actual meaning is ‘secret writing’. In cryptography, data are encoded and decoded computationally from time to time when needed.
Cryptography allows pseudo and even complete anonymity to recipients. When it comes to cryptocurrency, cryptography ensures the security and privacy of transactions and the recipients too who are taking part in these transactions.
It is also cryptography that prevents the double spending problem. Thus, cryptography allows you to secure transactions in the network, verify the transactions, and control the generation of new tokens.
Cryptography allows you to send and receive secure messages over a network. When you make a transaction, the message is encoded or encryptedcomputationally using a private or public security key and a security algorithm. When this encoded message is received by the receiver it isdecrypted using the security key and generates the original message.
Here, the most important factor of cryptography is the security key. It is the key that makes your message unreadable and secure so that no unauthorized personnel can access it. It is the keys that help you keep your secret. However, not many cryptocurrencies use security keys since most of them are public currencies.
Though, some private currencies do make use of these keys. Monero and Zcash are two such cryptocurrencies that use security keys to obscure the transactions occurring on their network.
Cryptography and Bitcoin
There are three cryptographic methods that Bitcoin uses to generate security key pairs and for mining. Cryptography helps bitcoin ensure its digital security and maintain privacy. Following are the three cryptographic tools used by Bitcoin:
- Encryption and Decryption: Encryption is the method of converting plain text to secret text that is unreadable to human beings and decryption is the method of converting the secret text to plain text again. This protects data from any unauthorized access and ensures data privacy. The security keys that you hold are used for this purpose. There are two types of security keys – public and private. Different encryption schemes require different numbers and types of keys.
In Bitcoin, the bitcoin network and database don’t require encryption since they are open and available for the public to view and to make interaction over the network easier. However, some dataneed to be encrypted in the bitcoin wallet. The bitcoin wallet needs to be secured and this process only allows the owner to transact through these keys.
- Hashing: The hash function converts plaintext to a string of hexadecimal characters, known as a hash or digest. Irrespective of how big the input of a hash function is, the output is always of a certain length. For example, the SHA-256 hash function comes from a family of secure hashing algorithms and always gives an output of 256 bits.
Moreover, every input data has a unique and random digest. Thus, however, times you apply the hash function on input data it will always give the same output. This makes the output deterministic and easy to verify. The randomness of hash functions is quite important for the Proof-of-Work system in Bitcoin.
In bitcoin mining,the hashing algorithm that is used to implement its Proof-of-Work system is SHA-256. Thus, if minor wishes to submit a block, the hash of the block should be under a certain level that requires rigorous guessing. Hashing also makes sure that every bitcoin block and transaction remains immutable and inalterable.
- Digital Signature: A digital signature is similar to a physical signature and ensures no unauthorized access. However, it is more trustworthy and secure compared to physical signatures since it is unique for every transactionand can’t be copied. There are 3 components of a digital signature –the transactional data, the signature created by the private key, and the signature of the signer.
The signer requires the private key to create a signature. However, it is not required to verify it. Moreover, the signature is generated using the digest of data and can’t be changed. ECDSA is the
digital signature algorithm employed by bitcoin. It is derived from the elliptic curve cryptography and makes cryptocurrencies purely peer-to-peer.
Cryptography is the backbone of cryptocurrency. It is what makes digital currencies trustworthy and secure. Bitcoin uses cryptography to improve user experience and make bitcoin mining efficient. If you are willing to invest in this secure asset you can visit bitcoin champion.