When we talk about cryptography, we are talking about the use of mathematics to protect information. With cryptocurrencies, as their name suggests, cryptography is a key factor in ensuring security and privacy.

Cryptography is the use of mathematical rules to protect information. It has a long history dating back to ancient civilizations. It emerged as a way to protect communication during times of war and political upheaval. The ancient Egyptians, Greeks, and Romans used simple techniques to protect messages, such as substitution ciphers, where characters and letters were given a different meaning. Later, more advanced methods were developed by Arab scholars in the Middle Ages. The development of the telegraph and the need for secure communication during World War II led to more modern, digital cryptography.

With the advent of computers and the Internet, cryptography has become one of the most important practices in the digital age for protecting sensitive information and ensuring secure communication. Namely, it enables the sent information to reach the addressee only and exclusively, and at the same time it also protects them.

Cryptography works on the principle of creating codes or ciphers. These can be downloaded and then decrypted by the intended recipient. The code is created in such a way that it can only be read by the person to whom it is intended, as it can only be unlocked with the recipient’s key.

To make it easier to imagine, let’s look at a simple example. Pete and Jane are seeing each other, and they correspond through physical letters because they find it romantic. Since they don’t want anyone else to read the contents of the letters, they agreed on a certain code (below: A = D, B = E, C = F…).

So Pete, instead of writing “I LOVE YOU” to Jane, writes “L ORYH BRX”. The code thus represents the key with which Jane can read the letter, but anyone else would not understand it.

Cryptography is used to protect a wide range of different types of communications, including emails, financial transactions, and military communications.

There are two main types of cryptography:

  • Symmetric cryptography; where the same key is used to encrypt and decrypt the message, and
  • Asymmetric cryptography; where the public key is used to encrypt the message and the private key is used to decrypt it.

Cryptocurrencies use asymmetric cryptography.

In cryptocurrencies, cryptography is used to secure transactions and other aspects of the cryptocurrency ecosystem, such as wallets and exchanges. It is an important part of the security measures put in place to protect the privacy and protect against fraud and unauthorized access.

Lesson Content