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Cryptography – Things you should know?

Since the advent of data and information, humankind has developed ways to secure and protect it over time. If we look at this from a historical point of view, Julius Caesar used to convert his letters into unreadable texts ensuring security from his enemies. However, modern-day methods are much more than some conversion of data according to fixed criteria. Cryptography is the science of securing data. Why am I talking about this? It’s because all cryptocurrencies use this for functioning. It’s an integral part that makes cryptos so secure.

So today, let’s talk about Cryptography and understand why it is so important to cryptocurrencies.

The word ‘Crypto’ in cryptocurrencies.

The word ‘crypto’ literally means concealed or secret. Cryptography is basically the process of exchanging messages, albeit in a secure manner. Cryptography technology isn’t limited to full anonymity and is dynamic: you can decide whether to have full or pseudo-anonymity. But what is its significance in cryptocurrencies?

In cryptocurrency, cryptography validates the security of transactions and participants. It also ensures the independence of operations from a central authority. Moreover, cryptography technology is used for:

  • Securing various transactions occurring on the network.
  • Controlling the generation of new currency units.
  • Verification of transfer of digital assets and tokens.

Cryptocurrencies replicate the concept of ‘real world signatures’, which are unique, counterfeit-proof, and secure from denial. They do so through advanced mathematical codes, storing and transmitting data values in a secure format, ensuring the transaction’s authenticity and participation.

How does cryptography work?

Simply put, cryptography uses a technique where the sender encrypts his message using a type of key and algorithm, sends this encrypted message to the receiver, the receiver then decrypts it using the sender’s algorithm and generates the original message. So what is encryption, then?

Encryption is the conversion of text into an unreadable string sent to the receiver. It consists of encryption keys that make the message, transaction, or data value unreadable for unauthorized readers or recipients. Thus, only the intended recipient can read the message, transaction, or data value.

Different types of cryptocurrencies use different levels of cryptography:

  • Bitcoin uses public-key cryptography where the value of the transaction is not hidden in the network. However,
  • ZCash and Monero are more privacy-oriented cryptocurrencies that use encryption obscuring the value and recipient of the transaction.

Different cryptocurrencies use different or some combination of cryptography methods.

Basically, there are three main encryption methods in cryptography:

  • Symmetric Encryption Cryptography
  • Asymmetric Encryption Cryptography
  • Hashing (Elliptical Curve Cryptography)

Symmetric Encryption Cryptography

Symmetric Encryption Cryptography utilizes the same secret key, encrypting the raw message at the source, transmit the encrypted message to the recipient. The receiver then decrypts the message at the destination. It is one of the simplest methods of encryption, but lots of complex variations exist for enhanced security. This method also offers the advantages of simple implementation along with minimum operational overhead. However, it suffers from issues of security of shared keys and problems of scalability.

Asymmetric Encryption Cryptography

Asymmetric Encryption Cryptography uses two different keys to encrypt and decrypt data. Those two keys are:

  • Public Key
  • Private Key

In this method, a person can encrypt a message through the receiver’s public key. But only the receiver’s private key can decrypt the message. Here, the receiver’s public key is known to the sender, while its private key is only known to himself/herself. Through this, the public key verifies the paired private key for the genuine sender of the message. Also, the private key holder can only decrypt the encrypted message successfully, providing both authentication and encryption for crypto transactions.


Hashing verifies the integrity of data and transactions on the network efficiently. It maintains the structure of the blockchain data and encodes account addresses. It is an integral part of the process of encrypting transactions that occur between accounts. This makes block mining possible. Along with that, Digital signatures allow genuine participants to prove their identities to the network.


Cryptography is what makes cryptocurrencies very secure. They literally emulate the real-world verified transactions onto a computer network through complex mathematical algorithms that ensure privacy and security. Moreover, all the various methods that are used through cryptographic techniques are ensuring that participants, as well as their activities, remain hidden up to an extent on the network.

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