Cryptography Techniques Used In Cryptocurrencies
Cryptocurrencies, as almost everyone is aware of, are leading the global market. They are known for their decentralized and secure peer to peer transactions. These benefits of speedy and secure transactions are making these cryptocurrencies popular and new cryptocurrencies are capturing the markets every day. Cryptocurrencies make use of the Cryptography techniques that ensure the transactions are safe and the users remain anonymous.
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Cryptography Techniques used in Cryptocurrencies:
There are various cryptography techniques used in cryptocurrencies. In this article, we will focus on few of them.
1) Symmetric Encryption Cryptography: This is the simplest method of encryption, but can use complicated adaptations to enhance the level of security. In this type of encryption, a single secret key is used to encrypt and decrypt the message. The message or the plaintext is encrypted using this key and is transmitted to the receiver. The receiver uses the same key to decrypt the message back to plain text which in turn will be used by the receiver for the transaction.
For example, the message we want to pass to the receiver is “DONE”. In Symmetric Encryption we use a single key like this example we can use digits for the letters. Hence, “DONE” can be encrypted as “415145”. This message is then transmitted to the receiver. He then uses the same key to decrypt “415145” to “DONE”. This method provides a simple implementation with minimum operation cost, but it has few security flaws that come with shared keys.
2) Asymmetric Encryption Cryptography: The second method of cryptography is the Asymmetric Encryption. This method uses two different types of keys, one public key, and another private key. The public key like the address of fund’s receiver can be transmitted openly while the private key is meant for the owner only. In this method, the sender encrypts the message using the public key. The message is then transmitted to the sender and the private key is used to decrypt the message. This method is more secure as it uses two keys. The public key validates the adjoined private key to authenticate the sender. And the private key is used to decrypt the message in a secure way.
3) Hashing: It is the third cryptography method. It is used to verify the authenticity of the transaction data on the network. It uses the blockchain data structure encoding users account addresses as a part of encrypting transactions between various accounts. Digital Signature supports these cryptography methods by authenticating genuine participants on the network.