What is Cryptography? Crypto Beginner’s Guide

When it comes to learning about all of the small intricate aspects of cryptocurrency, many often end up feeling overloaded by all of the highly-technical information. For people who are familiar with computer science or are advanced computer users, this usually isn’t an issue. While most can understand the basic essence of how cryptocurrency works, few understand why it works so well.

For most beginners, novice cryptocurrency investors, and anyone not overly passionate about the depths of technology, it does help to have some knowledge of the basics of cryptocurrency and an understanding on how it functions so securely. Knowing how something works can help you determine whether one altcoin is a better investment over another.

Understanding how each major cryptocurrency functions such as Bitcoin, Ethereum, Litecoin, and others can help you to determine how good the altcoin’s security is by comparison. But not all cryptocurrencies use the same protocols and algorithms when it comes to cryptography. In fact, more often than not each altcoin offers its own slightly different coding for security and so on.

Cryptography has a long history and has been in existence since ancient Egyptian times. While it has definitely come a long way from being a bunch of simple secret messages on stone, cryptography still has many variations even when used in cryptocurrency.

While you may not think much about it, cryptography is used in a wide variety of settings ranging from your bank transactions, the ATM, access to websites, regulate satellite and cable TV access, and more. Even your e-mail account uses a form of cryptography to keep your messages and account access secure from phishing attacks and hackers.  

What makes cryptography so secure? Why is it so important in today’s world? How does cryptography correlate to cryptocurrencies? How does using cryptography prevent hackers from gaining access and prevent digital thefts? Are there other uses for cryptography?

Cryptography: The Encryption Methods That Makes Cryptocurrency Secure

Let’s start off by first understanding what cryptography even means.

In old times, before the 20th century, cryptography simply meant the transfer of messages through the use of secret codes. Typically cryptography was used to convey messages and orders on the battlefield and exchange information between lords, diplomats, spies, and even within certain levels of religious institutions.

How these messages were sent was all done by using a written language and applying different arrangements of letters. Both sides would have a key to decipher the message, but anyone who intercepts the message would understand nothing. Why couldn’t the interceptor understand a coded message? Well, that is because the message would look like complete gibberish.

In fact, these old methods of cryptography can still be used today with success, provided both parties keep the key secret. But linguistic cryptography had its limitations. It relied heavily on the secrecy of the key, users of the code had to adhere to strict protocol when sending/receiving messages, and it was very time-consuming.

In the modern era, computers have taken up most of the heavy lifting and weeded out some of the human error in the process. Cryptography in computers relies on algebraic-based algorithms, number theory, statistics, information theory, and other forms of applied mathematics.

By using mathematics, the codes became tougher and longer, it made encrypted messages secure and it also made it a whole lot harder to crack. After all, anyone who loves a good spy-themed show will understand how hard it is to crack a digitally created encryption code.

While there are ways to crack a code, it usually relies on either stealing the key, sniffing out the key/password for direct access via phish attacks, trojans, worms, malware, and computer viruses or using brute-force attacks.

No, a brute-force attack isn’t someone literally hitting a computer. A brute-force attack is where a hacker’s computer system or group of computers are programmed to guess the encryption key by trying all the possible codes.

An example of a brute-force attack is one of those scenes in a TV show where they have someone run a bunch of numbers for a keypad’s passcode. What that little machine is actually doing is simply guessing each individual character until it is correct. But this is not as efficient as it is portrayed on TV and in movies.

Brute-force attacks come with many drawbacks. These types of cyber attacks are extremely time-consuming, put a lot of stress on a computer’s hardware, often leave the hacker vulnerable to being noticed, and more often than not the attack fails. One reason it fails is due to the size of the key in question.

The other reason is many computer programs come with a limitation on how many guesses can be made before the system cuts off access. Ever mistype your e-mail password and end up locked out of your account? Well, you can thank cryptography protocols for that.

Now that you have an idea on what cryptography is, you can now move on to the main event – cryptocurrency.

How Does Cryptography Work in General?

While many computer users understand what a key is, many don’t completely understand what a cipher is. Both are necessary for cryptography to work. These two components are what is considered encryption. Decryption is unlocking the coded message and revealing its contents through the use of keys.

  • The Cipher

This is a set of rules that will be used to convert your message into an encoded message. Once the message is encoded only you and the intended recipient of your message will understand what is written.

  • The Key

This is the part that tells you how to apply the rules of the cipher you are using.

Without the key, the cipher is uncrackable and essentially useless. Digital keys can come with varying degrees of strength depending on how they are created and how many characters are used in the key.

An example of encryption would be account passwords and e-mails. Without the password, no one can access your account. Without a particular key or protocol, no one will be able to read your messages unless they either have backdoor access or have access to someone who has received your message.

For someone to have a strong password there is a rule you can follow. Basically, the more numbers, letters, and symbols used in a password or key will determine how hard it will be to crack. The more random these letters, numbers, and symbols are in the chain of characters also makes the password hard to crack since it won’t have a predictive pattern. These rules are why randomized 32 and 64 character passwords are considered the strongest, whereas an 8 character password is considered fairly weak.

What is Asymmetric Cryptography?

This method utilizes two types of keys. One is given publicly to all users for easy encryption. This makes it easier to send a message without having to worry about malicious users and sharing a key before the message is sent. Your private key will then be used to decrypt all incoming messages.

You are more likely to come into contact with this sort of cryptography since it is used in most cryptocurrencies, messaging platforms, and other security networks. Examples of asymmetric cryptographic algorithms would be RSA, Elliptic Curve Techniques, and DSA, to name a few.

What is Symmetric Cryptography?

The simplest form of encryption that relies on only one secret key for both encryption and decryption. The key can be a number, a word or a string of mixed numbers and letters. An example of symmetric cryptographic algorithms would be Blowfish, RC6, AES, and so on.

The Difference Between Symmetric and Asymmetric Cryptography

Symmetric Cryptography

This method uses one key which has to be shared between two users in order for a message or transaction to go through. It an older technique but is fairly fast. It sadly relies on both users being available at the same time to share a key.

Asymmetric Cryptography

This method uses two keys, the private and public keys. This is a fairly new technique. It was created to combat the issues found in symmetric methods. Instead of users having to share a key to access information, it uses the dual key method to quicken up the process. This eliminates the need to share a key before making a transaction.

This process sadly takes longer due to the extra step in generating two keys.

How Cryptography is Used in Cryptocurrency

Cryptocurrency means cryptographic currency. Not all cryptocurrencies use cryptography for securing the contents within messages. Instead, cryptography methods are used in a slightly different way to ensure secure transactions and making sure all data is kept protected and untampered with throughout the blockchains and blockchain networks.

Some messaging platforms that utilize cryptocurrency as a way to store message data will often use a strict cryptographic protocol and algorithm as the method was originally intended.

There are two major cryptographic methods that have occurred since cryptocurrency has been introduced. These methods are hashing and digital signatures. Each provides security and encryption to the blockchains. Without these cryptographic methods, all transaction data and personal information would be read by everyone who uses cryptocurrency.

How Does Cryptography Work in Cryptocurrencies?

Hashing

A type of cryptographic method that transforms large amounts of data or information into short numbers. These numbers are very hard to imitate. This method is often used in various blockchains to ensure data flow and security throughout the blockchains.

There are four processes that occur with this particular method:

1.) To validate and verify all of the account balances of cryptocurrency wallets

2.) To encode all cryptocurrency wallet addresses

3.) To encode all transaction data between these digital wallets

4.) Is the core component that makes proof of work or mining possible. This is because the hashing method creates mathematical problems/puzzles for users to solve on each block in the blockchain.

Digital Signatures

A type of cryptographic method that acts in a similar way to a hand-written signature. Instead of pen and paper, you have a unique string of numbers and letters linked to your specific digital wallet.

Digital signatures act the same way your hand-written signature does. It is indisputable proof that a transaction came from your digital wallet. It is like a digital fingerprint of sorts. It is used in combination with two keys: a public and private key. Public keys are like your bank account number while a private key is similar to a secret pin code that only you know.

How the private and public keys work in cryptography is the private key is your encryption while the public key is for decryption.

Is Cryptography Really as Secure as They Say?

In essence, cryptography is secure to a point. Like with any software, hardware, protocol or method there are always exceptions and shortcomings. Encryption is only as strong as its weakest link. You can have the best cryptographic methods in place and still have problems with security if other protocols are not devised with it.

Encryption provides users security and anonymity from outside sources. However, encryption can be cracked in other ways. Many tech companies have backdoor access to all users who use their servers. So you are only as secure as the company’s ethics are concerned. Many government institutions have backdoor access to all information.

If you use a website the utilizes third-party intermediaries or software, you are also vulnerable. Microsoft OS is a great example of a company having both backdoor access to all of their user’s computer systems in combination with their proprietary software.

While cryptography does provide a means to security, the keys themselves can be altered if the key generation method is weak.

Open-source has provided a reliable avenue for users to become very secure with their computer systems and many other projects but even this has its own issues. Since everyone can see the kernel it provides security through a community constantly verifying and checking it.

However, you can accidentally download a bad kernel that has been altered and will then leave your system open to hackers.

Final Thoughts on Blockchain Cryptography and Cryptocurrency

While cryptography in the modern sense has become very technologically advanced, it can still be easily understood through basic concepts. With all the modern advancements in cryptography, these simple encryption methods have provided the world with another way to protect themselves in a constantly growing and diverse cyberspace.

In fact, thanks to cryptocurrency, there are more ways than ever thought before for the use of simple encryption methods. Open-source systems with an asymmetric cryptographic protocol are often the most secure with very few drawbacks. But you can easily attain a decent level of security with other cryptographic methods too.

What is Blockchain Cryptography?
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