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What is the Role of Cryptography in Blockchain?

Cryptography in blockchain is the main and core element that makes it a robust technology. Whatever you might have heard of the features of blockchain, such as immutability and data security, all these major abilities come from cryptography.

Cryptography in the blockchain is the main and core element that makes it a robust technology. Whatever you might have heard of the features of blockchain, such as immutability and data security, all these major abilities come from cryptography.

We all know that blockchain technology provides high data security, reliability, immutability, reduced costs, and better transparency to the system. This is because of the cryptography that makes blockchain development a powerful and reliable technology solution for businesses.

If you want to use blockchain technology in your business solution, you should know what role cryptography plays in blockchain so you can effectively utilize the advantages of this growing technology.

What is Cryptography?

Cryptography is the practice of using technical activity to transfer safe and encrypted data or messages between two or more users. It primarily makes the digital currency transactions secure, trustless, and pseudonymous, eliminating the need for third-party involvement in the transactions.

The word “crypto” in cryptography means “secret” in Greek and “graphy” comes from the Greek word ‘Graphein’ which means “to write.” So the term means “the act of writing a secret message that is hidden from external view.” With cryptography, the sender “encrypts” the message, making it hidden or invisible to a third party or any external source, and the receiver “decrypts” the message privately, making it legible again.

Hence, the core function of cryptography is to encrypt data or any piece of information and only allow it to be accessed by a pre-defined receiver.

Terminologies in Cryptography

  • Encryption is the act of converting normal text into complex or illegible text (a random sequence of computer bits).
  • Key: A small portion of data is needed to induce the output of the cryptographic algorithm.
  • Cipher: It is a cryptographic algorithm that is used for data encryption.
  • It is the reverse process of encryption—converting encrypted data into legible text.

What types of Cryptography are there?

There are primarily three ways a blockchain developer can execute cryptography algorithms:

  • Symmetric-Key Cryptography
  • Asymmetric-Key Cryptography
  • Hash Functions

Cryptography’s Role in Blockchain

Asymmetric-key algorithms and hash functions are the main types of cryptographic algorithms used in blockchain technology.

What Role do hash functions play in blockchain?

The hash function algorithm is used to enable the functionality of a single view of the blockchain for every user. Blockchains utilize the RIPEMD-160 and SHA-256 hashing algorithms as the hash function in the application or system. Below are the benefits that hash functions give to the blockchain.

  • Avalanche effect: It allows the application to detect minor changes in data, resulting in a larger difference in output.
  • It gives the same output to any input if a transaction or data has been passed through the same hash function.
  • Quickness enables the system to generate output in a very short amount of time.
  • Uniqueness: The ability to generate a unique output from a given input.
  • Reverse engineering is not permitted: blockchain developers cannot produce the input by having the output and the hash function.

What Role Does Asymmetric-Key Play in Blockchain?

In this cryptographic algorithm, the private key is generated by a random number algorithm. This public key is calculated by applying an irreversible algorithm.

The main advantage of the Asymmetric-Key encryption algorithm is that it has separate public and private keys. And these keys can be shared over unsecured channels.

However, it also comes with some disadvantages. It has a slow processing speed and unsatisfactory encryption strength. Along with this, blockchain developers have to ensure the security of the asymmetric encryption algorithm in the course of the transmission of data on the blockchain network.

In addition to this, asymmetric-key cryptography empowers blockchain technology with highly secure digital signatures. Because most modern businesses rely on digital signatures, this algorithm aids blockchain in the creation of secure, easily verifiable, and non-corruptible digital signatures.

The Most Important Advantages of Cryptography in Blockchain:

High Security

Cryptography allows the blockchain to record root hashes with every transaction safely coded. It means when an external party attempts to tamper with data from any part of the blockchain network, this change will be translated into a completely different hash at the root hash. As a result, users can compare the root rash to the root hash on their computer network and detect that the data has been compromised.

In this way, cryptography allows the blockchain to make a system secure. Cryptography is the core part that makes the blockchain ledger provide security features.

Scalability

Cryptography gives the blockchain the capability to record limitless transactions securely across the network. It combines several transactions into one hash, giving a system better scalability.

Reliability

Since cryptographic hashing is irreversible, it doesn’t allow any external party or user to alter the recorded transaction. This algorithm keeps data fully protected from any cyber-attack and thus ensures all users get a 100% authentic exchange of information on the digital ledger.

Conclusion

Cryptography is at the core of the blockchain. It empowers this technology with many unique and significant abilities that make it possible to create and implement secure, hidden, and trustless transactions on various networks. When you understand how cryptography works in blockchain, you get the intelligence to effectively use blockchain in your business solutions.

However, you are not expected to be an expert in this domain. The best way to intelligently use the benefits of blockchain technology is to partner with a professional blockchain development company. Hire highly experienced blockchain developers who can build an effective and reliable blockchain-based solution for your project.

Written By

Blockchain Consultant At MobileCoderz

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