Cryptography is the basis for cryptocurrency procedures, where messages are sent between two or more parties through data encryption.
Mainly the transmission of messages is done secretly; that is, nobody knows the sender or the receiver, and consequently, they use pseudonyms.
The cryptographic operations guarantee security and trust levels depending on the level of encryption that the messages have to avoid using third parties to confirm procedures. Sign up to the official site of Bitcoin Profit to learn more.
With the encryption of information, most companies keep their data protected from what we know today as computer hacking.
This type of technology guarantees that the transactions carried out do not need data from the people who execute the operations, much less financial data of a banking nature such as TDC or debit cards.
Even if the device or the servers where the information is stored is lost, if the encryption is correct, the data will be inviolable.
The encryption of the information is of the utmost importance for cryptocurrencies, and the parties involved are in charge of developing the data transmission processes.
The mathematical algorithms are the ones that make up the files that are transmitted from one point to another simultaneously, and where the participants are the ones that validate whether the transaction is correct or not.
Encryption occurs not only in the field of cryptocurrencies; from the searches we do on the internet, email to text messages from our phones are encrypted.
How encryption works
When the creator of Bitcoin, under the pseudonym Satoshi Nakamoto, proposed the idea of this digital currency that revolutionized the financial market, he defined cryptography as the basis of the processes with any digital currency.
Nakamoto solves cryptographically the inconvenience that arises called double spending, where through public and private keys, it is possible to carry out reliable and secure operations between people who do not know each other.
All this without the need to use a third party that can validate the transactions; these intermediaries are represented by financial entities such as banks.
What are Public and Private Key?
When talking about public and private keys, direct reference is made to the methods used in the blockchain platform to decrypt and therefore decrypt the data contained in a message or cryptographic operation.
These keys are based on mathematical algorithms; any participant can know the public keys. In contrast, private keys must be stored with suspicion in secure places to protect users’ information or digital assets.
Depending on the type of cryptocurrency used, the private keys will differ from one currency to another; this type of encryption is transmitted in bits.
The most common example when we refer to the use of public and private keys is reflected in digital wallets.
In the specific case of wallets, when talking about a public key refers directly to the address of user X; this serves as a means of approving access to other users to carry out transactions with that wallet, and the private key will be essential to confirm the operation being performed.
Encryption according to the type of key
As any computer procedure requires a classification, that is why both the public and private keys can be encrypted in different ways, among which we find:
- asymmetric encryption
This type of encryption is based on using a public key to prepare a summary of the content of the message and a private key to decrypt it. The best-known methods for this type of encryption are ElGamal and RSA.
This type of encryption aims to keep the operation as authentic as possible, avoiding the loss of information during the transmission process.
- symmetric encryption
Unlike asymmetric encryption, the same key is used to create the content and decrypt its data. The most used methods in this type of encryption are AES, DES, and triple DES.
This unique key is characterized by the fact that it can be the same or different between the parties. Therefore, it is essential to receive and validate the information so it can be decrypted.
Every time more information is acquired regarding the processes and concepts used during cryptocurrency transactions, the fact that they are safe and reliable operations becomes clearer.