Encryption

Encryption is the method of encoding information, which means information is converted into secret code to hide its true meaning. Cryptography is the science of securing information and communications through Encryption and decryption.

Encryption makes an information input unreadable as the algorithm used in the process converts the original text, called plaintext, into an alternative form known as ciphertext.

Encryption is an effective way for individuals as well as companies to protect sensitive information from the risk of hacking. For instance, websites that transmit credit card and bank account numbers encrypt the personal data of users to prevent fraud and identity theft.

When authorized users need to read the data, they may decrypt it through a binary key or password. This converts ciphertext back to plaintext, thus allowing users to access the original information.

Digital data encoding through cryptography is considered secure as it can only be read or decrypted by those with the correct key or password.

Two types of Encryption:

Asymmetric Encryption

Asymmetric cryptography finds its applicability when enhanced security is prioritized over speed and when there is a requirement for identity verification. Asymmetric Encryption is used for digital signatures while signing an online document and in blockchain to approve transactions for cryptocurrency.

Symmetric Encryption

Symmetric Encryption is when speed is prioritized over increased security and when one secret symmetric key is used to encrypt the plaintext and decrypt the ciphertext. Symmetric Encryption is mainly used in credit card transactions.

Relevance of encryption in cryptocurrency:

Encryption has become much more critical in today’s digitally-connected world, where most financial transactions are done online. As we know, Cryptocurrencies and digital assets are based on the concept of blockchain technology. The blockchain is connected together through a coded network, cryptography, of which Encryption and decryption are the major elements.

Bitcoin (and Ethereum, including other cryptocurrencies) uses a technology popularly known as public-private key Encryption. This makes them “trustless” – and allows secure transactions between strangers sans a “trusted intermediary” such as a bank or Paypal in the middle.