Abhishek Rana
What is encryption? What is its role in Blockchain?
By Abhishek Rana in Blockchain on Jul 22 2019
  • Laxmidhar Sahoo
    Feb, 2020 14

    What is encryption?

    Encryption is a way of scrambling data so that only authorized parties can understand the information. In technical terms, it is the process of converting plaintext to ciphertext. In simpler terms, encryption takes readable data and alters it so that it appears random. Encryption requires the use of an encryption key: a set of mathematical values that both the sender and the recipient of an encrypted message know.

    Encryption defined from Cryptography is intended to create generated or written codes that allow people to keep certain information in secret. Simply put, cryptography turns any kind of data into a new format that can be read only by authorized users. Thus, this data cannot be transmitted by unauthorized users. To make this data readable, it should be converted back into a regular format.

    Cryptography is widely used to protect information of any kind. To read the encrypted information, one must have a key that will allow them to decrypt it. When stored and transmitted, the information remains integral. Cryptography also allows for verifying the sender and controlling delivery.

    Using key pairs, receivers and senders can authenticate each other. There are many different algorithms for encryption, and here are the most common ones:

    Public Key Cryptography. This algorithm implies using two keys. The first key is a public key which can be accessed by anyone. Another key is private and can be accessed only by its owner. When the sender sends a message, they use the public key, while the receiver uses the private key to receive and decrypt it. To ensure non-repudiation, the sender uses a private key to encrypt plain text. In turn, the receiver can decrypt it using the sender’s public key. This allows the receiver to understand who sent the message.

    Secret Key Cryptography. This algorithm is also called symmetric encryption. In this case, the same key is used both to encrypt and to decrypt the information.
    Hash Functions. This method is different from the secret key and public key algorithms, and it’s also known as a one-way encryption. This method isn’t based on keys. The main purpose of hash functions is to make sure that certain information has not been changed. Hashes look like long serial numbers generated automatically. They are very sensitive to any changes and represent the data exactly. Any change in the input data leads to a completely different hash output.

    The Importance of Cryptography for Blockchain

    Blockchain uses cryptography to protect identities of the users of a network, to ensure secure transactions, and to protect all sorts of valuable information. Thanks to cryptography, everyone who uses blockchain can be sure that the information recorded in a blockchain is valid and secure.

    Although based on a similar framework, public-key cryptography is a better option for the blockchain technology than symmetric-key cryptography. Public-key cryptography has a number of improvements compared to symmetric-key cryptography. It allows users to transfer data using a public key that can be accessed by anyone.

    A combination of public and private keys enables encryption of the information, while the sender’s and recipient’s public keys decrypt it. It’s impossible to get the private key having only the public one so everyone can send their public keys without being afraid of somebody accessing their private keys. When the sender encrypts the information, they can also be sure that it will be decrypted only by the intended recipient.

    In addition, blockchain relies on digital signatures. Just like regular signatures, digital signatures are intended for authentication and validation. Digital signatures are an integral part of various blockchain protocols, being one of the main tools used to ensure the integrity and security of the information stored in a blockchain. The range of applications includes securing blocks of transactions, software distribution, transfers of important information, contract management, and other tasks where preventing external access is important.

    Theoretically, when a user sends some encrypted data, it can be altered by a hacker, which will be unnoticed by both the sender and the recipient. However, digital signatures prevent hackers from altering the data because if they change it, the digital signature will also change and become invalid. Thus, digital signatures not only protect data but also indicate if it has been altered.

    Additionally, digital signatures secure the identity of the sender. Every user has his or her own digital signature so that all users can be sure that they’re communicating with the right person. It’s virtually impossible for a hacker to fake somebody else’s digital signature because such a task is almost impossible from the mathematical point of view. Digital signatures are linked to private keys, ensuring non-repudiation. Thus, if a user signs something digitally, it becomes associated with this user and can be legally binding. It becomes possible due to the reliability of private keys and digital signatures.

    Here’s how digital signatures are created:

    They can be created using a key generation algorithm, based on a public and private key.
    Signing algorithms can combine a private key and data to make a signature.
    Signatures are verified using an algorithm that analyses the public key, the signature itself, and the message, determining whether or not the message is authentic.

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