1 | Cryptography

Cryptography is a method of developing techniques and protocols to prevent a third party from accessing the content of a private messages during written or digital communication. The term cryptography is comprised of two Greek terms: kryptos meaning “hidden” and graphein meaning “to write”.

One of the key components of digital cryptography are ciphers. Ciphers are algorithms used to encrypt and decrypt information. Encrypted information is called ciphertext while decrypted information is called plaintext. There are two types of ciphers; symmetric ciphers and asymmetric ciphers.

The ciphers that make blockchains possible are asymmetric ciphers. Asymmetric ciphers use a different key to encrypt information than they do to decrypt information. These keys are commonly known as the public and private keys. When dealing with cryptocurrencies and blockchain in general, it is imperative that you never let your private keys fall into others’ hands. Keep your private keys in a secure, offline place and never share it with anyone.

How do crypto wallets utilize cryptography? When you are authorizing transactions, you have to prove that you are the owner of the private key corresponding to funds in the wallet. This is done using a Digital Signature Algorithm. When a user authorizes a transaction, they provide proof that they are the owner of the private key corresponding to the public key’s funds creating a digital signature. The digital signature reveals no information about the private key, but can be verified with the corresponding public key and a proof is constructed.

Another important use of cryptography in blockchain is through hashing. When a new block of transactions is written to the blockchain, the hash algorithm adds a hash (an alphanumeric code) to the block. The next block in the blockchain will begin with the hash from the previous block.  This hash function links the blocks and maintains the integrity of the data written to the block. Any alteration in any of the blocks data leads to an alteration of the block’s hash causes the shutdown of the blockchain.

Cryptography offers important benefits to blockchain technology including:

Data encryption: information and data are secured against unauthorized access to the content

Immutability: blocks are inextricably linked and their data cannot be altered in any way

Security: data tampering is not possible therefore users can be assured of legitimate transactions

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