Cryptocurrency and blockchain technology is known for their decentralized nature and the security they provide. The technology behind blockchain maintains a distributed ledger that allows users to produce a decentralized, user-centric environment that the users govern.
The blockchain has the ability to create a user governed utopia that a central authority will not have the power to control. This technology can be a powerful tool if used carefully, but when single handedly used, blockchain has a lot of shortcomings.
While blockchain is an algorithmically decentralized and safe concept, practically speaking, security is the biggest concern. For example, a DeFi DApp is prone to infinite minting attack if hacked. Likewise, a wallet is prone to multiple attacks if a user interacts with a malicious website or just clicks on a wrong advertisement on the internet. Therefore, security is the biggest concern in this upcoming fintech world. Enters: cryptography.
Synonym with anonymous cryptography literally means secret writing. Cryptography is essentially a compilation of codes or encryption that allows encoding data between individuals, especially while interacting with third-party platforms. It is mostly used to conceal sensitive data that malevolent parties can see while it flows throughout the internet. Cryptography makes it possible to hide anything from nuclear codes to sending a text message to a friend.
There are many ways in which a cryptographic algorithm works, from assigning a hash value to the date to simply obfuscating it, whatever the system's needs are. While the roots of cryptography can be traced back to ten BC, cryptography has been present and has been used in almost all the major world events; it has straight-up military use cases to basic use cases like securing a phone call.
Cryptographic technology is a versatile technology with multiple use cases in the crypto space. Some of the most common use cases are:
Securing and verification of the transactions on a particular network in a transparent manner.
Making sure that the protocol is free from any kind of malfeasance.
Securing the minting, i.e., generating new currencies, units, etc.
Verification of transfer of digital assets, including cryptocurrency, NFTs, etc.
As we mentioned above, there are many ways to approach when it comes to how we can apply cryptography to a piece of data. Before cryptography became associated with modern technology, one of the simplest forms of cryptography was the Caeser cipher. Caesar cipher was used to send important private messages to peers; in it, the letters are simply shifted equivalent to the number of the key. For example, if the key value is 13, the word 'CRYPTOCURRENCY' will be written as 'PELCGBPHEERAPL.' This demonstration is a very simple example of cryptography that was once used by Julias Caeser himself.
In modern times, however, the complexity of such algorithms has increased multifold with the increasing computation power of digital systems. Encryption is one of the most important features of modern cryptography as it encodes the data (known as plain text) into cipher text which can be decoded by the holder of the private key, which converts the cipher text into the plain text again for the user to read. These encryption keys theoretically make a piece of data or transaction unreadable to the outside world; it makes sure that only the concerned party receives the unaltered message.
This task of assigning cryptography to sensitive data in the modern world is done by extremely powerful computers since they require incredible mathematical prowess. Cryptocurrencies have found many tools developed by cryptography to be highly useful, but however complex the system, the basic principle remains the same - hide the true meaning of the plain text and make sure that only the person concerned has permission to decipher it.
Simply put, a private key is a secret set of numbers that allows a cryptocurrency or an NFT to be spent or sent to another wallet. It can be seen as the password that is to be put before entering a transaction. Hence the name is private; it is very important for wallet holders to keep the private key to themself. If an individual with malicious intent gets a hold of your private key, they can hypothetically drain your wallet. Most private keys use Symmetric Encryption Cryptography.
Symmetric Encryption Cryptography uses a single key to encrypt, transmit and decrypt messages. This is one of the most simple encryption styles yet one of the most effective and fast. When using symmetric key technology, the keys being used can either be identical or different between two or more parties at the same time.
The nature of a private key can be different depending on the blockchain a user is using; for example, Bitcoin uses a 256-bit number and letter combination; below is what a private key for bitcoin looks like:
A public key is, as the name implies, a key that is given to everyone. A public key is a key that you have to send the sender so that he can send a particular cryptocurrency to the wallet. Public keys use a different type of encryption, named public-key cryptography(PKC).
PKC helps in validating the authenticity of data or transactions using asymmetric encryption. In asymmetric encryption, two keys are used; public keys are used to encrypt the transaction, while a private key is used to decrypt the same.
This is what a public key looks like:
3048 0241 00C9 18FA CF8D EB2D EFD5 FD37 89B9 E069 EA97 FC20 5E35 F577 EE31 C4FB C6E4 4811 P2D4 BC8F BAFA 362F 922B F01B 2F40 C744 2654 C0DD 2881 D673 CA2B 4003 C266 DH34 CB02 0301 0001
The concept of cryptography and encryption has been around for centuries and has been evolving since. Cryptography is an underrated pillar of the construct developed by blockchain and cryptocurrency. With the rise of digital currencies, developers might achieve some incredible feats in the world of cryptography in the near future.