Cryptography is the art the art of sending secret or encrypted messages.
Cryptography in cryptocurrencies is a digital signature- much like your physical signature if you are signing to buy or sell something, but your digital signature is a code that is completely personal to you and impossible to forge. This provides a way of making sure that messages or transactions can only be received or read by the intended recipient.
Cryptography – or the art of sending secret or encrypted messages- has been around for a long time. The oldest evidence of Cryptography so far found, in an inscription carved inhieroglyphic symbols in a rich man’s tomb in Egypt dated to around 4000 years ago from
roughly 1900 BC. Coded Hieroglyphs were used to pass secret messages between kings that only the scribes and kings were able to read.
Many of the early forms of cryptography would have involved messengers carrying coded messages, and often riding long distances by horseback and risking their lives to send these messages.
Cryptography developed rapidly out of need during WW1 and WW2 and was used most notably during the second World War at Bletchley Park in England to decode the Nazi Enigma codes.
For anyone interested in learning more about cryptography and especially how it was used during the war, the museum and site at Bletchley Park in England is a fascinating place to visit (link https://bletchleypark.org.uk ) and you can see where Alan Turing solved the Enigma Codes – as also seen in the movie The Imitation Game.
The need for cryptography in daily life really came about when everyone – rather than just research and academic institutions – started having personal computers, which needed security measures to prevent against hacks. Governments were also demanding higher levels of security. Encryption systems were developed to be so secure that even the most advanced supercomputers couldn’t crack them. Such encryption security is now taken for granted and comes as standard with all computers today.
However, there were still security flaws in financial and banking systems – both because traditional finance systems are heavily centralised, and because traditional bank accounts are relatively easy to hack – as seen recently by the overwhelming amount of online and credit card fraud.
The technologies around cryptography have evolved considerably in recent years, and encryption is now a part of everyday use in cryptocurrencies (which means encrypted currencies), as well as being built into personal computers as a security measure.
One of the main reasons behind Satoshi Nakamoto’s creation of bitcoin was the issue of ‘double spending’ – which is where it is possible to be charged twice if paying with a traditional bank or debit card. A large part of why Bitcoin is still so successful today, is because it solves the issue of double spending.
Bitcoin is built on several types of cryptography and it is this encryption or ‘crypto’ technology that leads the modern digital currencies to be called cryptocurrencies.
Cryptocurrencies use cryptography to make their transactions and wallets secure. One type of cryptography used by cryptocurrencies is the digital signature – in crypto these are called ‘private keys’. Private keys serve the same purpose as signing with your physical signature- however a signature is easily forged – whereas the encrypted digital signatures are very difficult if not impossible to forge.
Cryptocurrency transactions use encrypted code – which means that they can’t be duplicated or manipulated – you can always see the record of on the blockchain. Whilst the transactions for most crypto currencies including Bitcoin and Ethereum are sent publicly, there are also secrecy or privacy coins, such as Monero, which send their transactions privately, so that they can’t be seen, and these are more similar to the original form of cryptographic messages.
Crypto currencies also use cryptography in algorithms used to organise block data – to help organise how crypto transactions are sent and recorded on the blockchain.