Cryptography is the very backbone of crypto’s security. It creates and secures the peer-to-peer architecture, which lends crypto its decentralized, secure, and nearly anonymous nature. We thought it is a good idea to explore the art and science of cryptography in the context of crypto to deepen your understanding of what makes crypto tick.
What is Cryptography?
Think back to childhood games where you might have swapped letters, jumbled words, or invented symbols to keep secrets from others. That playful exercise is a simplified version of what cryptography does—protecting information by making it readable only to those with the right knowledge.
Today, cryptography underpins nearly every digital interaction. When you send a message online, it’s converted into a scrambled code known as “ciphertext.” To an outsider, it appears meaningless. But with the right key, the intended recipient can unlock it and see the original message exactly as it was sent.
In the context of crypto, cryptography ensures that transactions and participants remain secure, double-spending of a coin does not occur and all of this can happen without a central entity (such as a government or bank) overseeing the system.
Cryptographic Methods Used In Crypto Assets
Crypto assets use several customized variations of three main cryptographic methods to ensure safety and integrity:
- Symmetric Encryption Cryptography
This is simple, relatively easy to crack, and therefore minimally used in core applications. In this, the exact same code has been used to encrypt and decrypt the data, and both parties have copies of the same cipher. It means that any eavesdropper cannot know what the message says. However, if they really wanted to crack the cipher, they’d only have to crack one. To add another layer of complexity, asymmetric encryption is used.
- Asymmetric Encryption Cryptography
This algorithm uses a pair of keys, one to encrypt and another to decrypt. This way, senders and recipients do not need to share the cipher with one another. Instead, an algorithm creates a pair of keys and sends one key each to the sender and recipient. The sender can only encrypt it and the recipient can only decrypt it.
- Hashing
Cryptographic hash functions are complex mathematical algorithms that are used to encrypt data in such a way that it cannot be reverse-engineered. This is especially useful to convert private keys into public keys and to verify that public keys and private keys are paired.
Crypto transfers rely heavily on public key encryption, which is a form of asymmetric encryption cryptography, and on hashing to ensure the integrity of the keys.
Public Key Encryption
In this system, information is locked using a public key that anyone can access. However, unlocking it requires a matching private key, which is kept secret. The process also works the other way around—if data is encrypted with a private key, only the corresponding public key can open it. These keys aren’t simple passwords; they’re extremely long strings of numbers and letters, designed to be practically impossible to guess. While public keys can be openly shared, private keys must always remain secure and confidential.
An Analogy
Picture sending someone a locked box. The lock you use isn’t yours—it’s one they gave you, designed so that only their unique key can open it. This setup ensures that whatever you place inside can’t be accessed by anyone else along the way. That’s how a public key functions: it lets others lock information for you, but only your private key can unlock it.
Now, security isn’t the only concern—proof of origin matters too. To show the box truly came from you, you attach a seal made with your own private key. Anyone can check that seal against your public key, and if it matches, they know it’s authentic.
In digital terms, this is the foundation of how public and private keys operate. The public key enables secure communication, the private key guarantees only the intended recipient can access it, and digital signatures provide a way to confirm identity and build trust.
How Does Cryptography Support Crypto?
Cryptography is an elegant solution to ensure that cryptos remain free and fair. Crypto largely uses it for 3 actions:
- Transaction Security
This includes algorithms that ensure data remains confidential, that its integrity is maintained, that it’s origin and legitimacy can be authenticated, and that all of these actions are performed in such a watertight manner that nobody can doubt the data.
- Generation of new currency units
Hugh powered computers mine new coins by solving complex cryptographic equations. These equations verify virtual currency transactions and then add them on the decentralised blockchain ledger to form a public record of crypto transactions.
- Verifying transfers
Since the identity of the sender and recipient are encoded in their public and private keys, which are generated and verified with cryptography, it’s an important tool to verify the authenticity of each transfer.
At the heart of crypto assets lies cryptography—the system that gives them their reliability and resilience. It’s what transforms digital money from an idea into something secure and trustworthy. As Jacob Appelbaum famously said, “One must acknowledge with cryptography no amount of violence will ever solve a math problem.” By grounding every function in mathematical proof, this technology makes each transaction both tamper-resistant and verifiable, ensuring users can depend on the integrity of the network.
Disclaimer:
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.
