With the development of computer technology, the importance of information exchange has grown rapidly. However, this process, in addition to the undeniable advantages, has another side. The more important information becomes, the more are the people who want to steal, distort, or otherwise use it for their own purposes. And cryptography is one of the few ways to effectively prevent this.
Most often, due to various coding and encryption algorithms, many of which were invented long before the advent of the “digital era”. However, the increase in computing power gave potential attackers ways to crack ciphers, so completely new cryptographic methods of protecting information were required.
What it is?
In a simplified form, cryptography is the science of hiding information. For example, modern cryptographers use mathematical principles for this purpose, which allow achieving high integrity and authenticity of the data.
In a simplified version, the base text (readable) is exposed to a certain algorithm, resulting in a new text (unreadable). If the person to whom this new text is sent has a decryption key that allows you to wrap the algorithm in the opposite direction - it will be able to read the base text.
Thanks to this, encrypted files can also be transferred over insecure networks. It is worth considering the factor of encryption complexity. More valuable data, such as information about cryptocurrency transactions, are encoded in a more complex way than, personal correspondence for example.
It is the cryptographic methods of information protection that laid the foundation for the operation of the first blockchain network - Bitcoin. Since only they made it possible to ensure proper decentralization while maintaining the confidentiality of all important information.
What is the reason for this?
Modern cryptography works with different directions of research, however, the greatest importance, especially in our time, has been given to those associated with symmetric and asymmetric encryption, hash functions and digital signatures.
Digital signatures, for example, guarantee that each user can spend money only from his wallet and only once, which, in fact, underlies the very principle of "electronic money".
As for the hash functions, this mechanism provides one of the options for confirming the consensus algorithm - PoW, as well as the reliability of the mining process, which is responsible both for generating new coins in the Bitcoin network and for checking already completed transactions. In this particular situation, the cryptographic function SHA-256 is used.
So without understanding the principles of cryptography, it is impossible to effectively improve the blockchain networks in general and cryptocurrencies in particular. For example, later networks use more efficient encoding protocols than SHA-256. And this process does not stand still.