What is cryptocurrency?
Cryptocurrency – cryptocurrency (or cryptocurrency) is a digital asset designed to act as a medium of exchange, using strong cryptography to secure financial transactions, controlling further generation units and verify the transfer of assets. This coin uses decentralized control as opposed to a centralized digital currency and a central banking system.
The decentralized control of each cryptocurrency operates through distributed ledger technology, typically blockchain, which acts as a public database of financial transactions.
Bitcoin, first released as open source software in 2009, is often considered the first decentralized cryptocurrency. See more : What is Bitcoin?
Cryptocurrencies like Bitcoin and Ethereum have gained immense popularity due to their decentralized, secure and anonymous nature, supporting peer-to-peer architecture and helping to transfer money and digital assets number between two different individuals without a central authority.
How does this automated and anonymous cryptocurrency system ensure that all transactions are processed with due diligence and validation without any interference? Here Bitcoin Magazine will introduce readers to the origin of the word cryptocurrency.
The “Crypto” in Cryptography – “Cryptocurrency” in Cryptography
Words code literally means secret or secret – in this context anonymous. Depending on the configuration, encryption technology is implemented that guarantees full or pseudo-anonymity. In principle, cryptography guarantees the security of transactions and participants, the independence of operations from a central authority, and protection from double spending.
Cryptographic technology is used for many purposes – to ensure various transactions occur on the network, to control the creation of new currencies, and to verify the transfer of digital assets and token.
Draw an analogy with a real-world transaction – like signing a bank check – that requires your signature. A trusted and secure signature requires that it have the following properties: someone else needs to verify that it is indeed your signature; it has to be proof that no one can forge your signature, and it has to be secure against any potential rejection by the signer later – that is, you can’t waive a commitment once signed.
Cryptocurrency simulates the concept of a real-world signature using encryption techniques and encryption keys. Encryption methods use advanced mathematical codes to store and transmit data values in a secure format, ensuring only those data for which the data or transaction is intended can be received, read, and process and ensure the authenticity of transactions and participants’ signatures in the real world.
How does the passcode work?
Think about getting a radio signal on your car radio that allows you to listen to the broadcast. This broadcast is public knowledge and open to all. In contrast, think of defensive level communication, like that between soldiers on a combat mission. This communication will be kept confidential and encrypted. It will be received by and known only to the intended participants instead of being open to the whole world. Cryptographic cryptocurrencies work in a similar way.
In the simplest terms, cryptography is a technique for sending secure messages between two or more participants – the sender encrypts/hides the message using a type of key and algorithm, sending the form This encrypted message reaches the receiver and the receiver decrypts it creating the original message.
The encryption key is the most important aspect of cryptography. They make a message, transaction, or data value unreadable to unauthorized readers or recipients and can only be read and processed by the intended recipient. The keys make cryptographic information, or secret.
Many cryptocurrencies, like Bitcoin, may not explicitly make use of such secretive, encrypted messages, as most of the information related to Bitcoin transactions is made public to a good extent. . However, there is a new cryptocurrencies, like ZCash and Monero, that use various forms of cryptographic encryption to keep transaction details secure and completely anonymous during transmission.
Several tools developed as part of cryptography have found important application in the workings of cryptocurrencies. These include hashing and digital signature functions that form an integral part of Bitcoin processing, even if Bitcoin does not directly use hidden messages.
See also: How does Bitcoin work?
Encryption method used in cryptocurrency
It uses the same secret key to encrypt the raw message at the source, transmit the encrypted message to the receiver, and then decrypt the message at the destination. A simple example would be to represent the alphabet with numbers – say, ‘A, is’ 01, ‘Bieu is’ 02, etc. A message such as HELLO, would be encoded as Number 0805121215, and the value This value will be transmitted over the network to the receiver. Once received, the receiver decrypts it using the same reverse method – ’08’ is ‘H’, ’05’ is ‘E’, etc., to get the original message value, HELLO. Even if unauthorized parties receive an encrypted message, 0805121215, the encryption will be of no value to them unless they know the encryption method.
The above is one of the simplest examples of symmetric encryption, but many complex variations exist for added security. This method offers the advantages of simple implementation with minimal overhead, but suffers from public key security issues and scalability issues.
Asymmetric encryption encryption
Use two different keys – public and private – to encrypt and decrypt data. The public key can be made publicly available, like the recipient’s address, while the private key is known only to the owner. In this method, a person can encrypt the message with the recipient’s public key, but it can only be decrypted with the receiver’s private key.
This method helps to achieve two important functions of authentication and encryption for cryptocurrency transactions. The former is achieved when the public key verifies the paired private key for the sender of the genuine message, while the latter is done because only the holder of the paired private key can successfully decrypt the encrypted message.
Used to effectively verify the data integrity of transactions on the network. It maintains the blockchain data structure, encrypts everyone’s account addresses, is an integral part of the encryption of transactions occurring between accounts, and makes block mining possible. In addition, digital signatures complement these various encryption processes, by allowing participants to actually prove their identity to the network.
Many variations of the above methods with desired degree of customization can be implemented on different crypto networks.
Anonymity and cloaking are an important aspect of cryptocurrency and the various methods used through cryptographic techniques ensure that participants and their activities remain hidden within reach. vi desired on the network.
What is virtual currency?
What is Bitcoin Mining? How does Bitcoin mining work?
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