Thanks to cryptography, cryptocurrencies offer a new “safer” way of paying. But what exactly is cryptography and how are the cryptocurrencies you invest in actually secured? This article will tell you all about cryptography, the security of blockchain technology, and cryptocurrencies.
A cryptocurrency is secured through encryption, and this encryption is called cryptography. The word "crypto" comes from Greek and means "secret." Cryptography uses a technique that encrypts information from a transaction. This technique makes it possible to complete anonymous transactions without interference from governments and financial institutions. Cryptography makes the transaction process more practical and faster. The sender encrypts the data within a transaction. The receiver can then use a "key" to decrypt the transaction.
Cryptography does not only function as encryption for cryptocurrencies. Computers and cell phones also encrypt and decrypt data all day long using cryptography, from Google searches to e-mails you receive.
You can compare cryptography to a lock on your house. When you want to enter, you need the key. With cryptography, this works in a similar way. When you want to see the transaction, you need a key to decrypt the transaction.
How does Cryptography work?
Cryptographic encryption can be divided into two categories: symmetric encryption and asymmetric encryption. Symmetric encryption requires only one key to encrypt and decrypt the transaction, with both parties holding the same key. The parties receive this key through a secure channel, which must be exchanged to complete the decryption process.
Asymmetric encryption, better known as public-key cryptography, requires two keys to encrypt and decrypt the data of a transaction. This encryption requires private and public keys for the decryption process. Both keys are aligned in a way that you still need both keys.