Cryptography In Cryptocurrencies
Cryptocurrencies like Ethereum, Litecoins, and Bitcoins are a lot popular nowadays. They make use of peer-to-peer payment ways that are decentralized, meaning that they are not controlled by any banks or government. Cryptocurrency transactions are secure and the users remain anonymous. Because of all these reasons, they are gaining huge popularity.
In this article, we will explain what cryptography is and its basic role in cryptocurrencies.
What is Cryptography?
Cryptography in simple terms can be defined as encryption. To secure the information it is encrypted or modified so it won’t be used by anyone who does not know how to decrypt it. Encryption means converting simple data (plaintext) into something unintelligible text also known as ciphertext. Whereas decryption is reverse of encryption and includes converting the ciphertext to plaintext that can be used further. Cryptography is used in many places where it is essential to keep the data secure in order to prevent it from getting into wrong hands. Crucial data like military, finance related data or information of medical importance uses cryptography to secure sensitive data.
Cryptography is used for various reasons like for protecting the transactions happening on networks. It is also used for verifying the give and take of digital tokens and assets. Cryptography helps in keeping the transactions secure as well as keeping the users anonymous and independent of any third party.
How is Cryptography used in Cryptocurrencies?
In the real world, the bank transactions are done by verifying the account holder’s signatures. In cryptocurrencies, the cryptography techniques are used to generate encrypted keys to carry out the transactions. Cryptography makes use of high-level mathematical codes for storing and transmitting data values. These data values are then transmitted in a safe format to the designated users who can use the encryption keys to verify the transactions like the signatures used for bank transactions.
Encryption Keys are a very essential feature of Cryptography. They help in passing the right information to the right person. If it reaches wrong hands it might not even be readable as the person reading it won’t be able to decrypt it.
Few cryptocurrencies similar to the Bitcoins may not send the encrypted messages. Bitcoins transactions are public to a large extent and so it does not need to send any hidden messages. But the newly launched cryptocurrencies, for example, the Monero or ZCash makes use of various cryptography encryptions so that the transactions are secure.
Even if Cryptocurrencies like Bitcoins do not directly use encrypted messages, Bitcoins need to use some of the important aspects of cryptography such as the digital signature and hashing. Hence cryptography plays an important role in cryptocurrencies.
Cryptography is also used in various automated trading software as the Crypto VIP Club, refer to the link to continue reading more about the software.