Cryptography, which is nothing but a means of hiding information, has been in use for centuries. Its rise to fame was during World War 2 when Alan Turing, a computer scientist, was able to decrypt codes being sent by the German army, thereby causing Hitler’s Germany to be defeated. In Blockchain/ Distributed Ledger Technology, cryptography is the most crucial component whereby the trust function is replaced by using cryptography. Even the term “cryptocurrency” – is currency which is a result of using cryptography. Formally stated – Cryptography is the backbone of distributed ledger technology (DLT). It is used to secure data, verify transactions, and create trust between participants in a DLT network.
Importance of Cryptography:
In today’s digital age, with the increasing frequency of online (cyber) attacks, data protection has become one key area for organizations to overcome various risks.
Importance of using cryptography is as follows:
1. Confidentiality: Cryptography can be used to protect the confidentiality of data by encrypting it so that it cannot be read by unauthorized parties.
2. Integrity: Cryptography can be used to protect the integrity of data by ensuring that it has not been tampered with since it was encrypted.
3. Availability: Cryptography can be used to protect the availability of data by preventing unauthorized parties from accessing it.Cryptography, thus, is a powerful security tool that is being used to protect data from a variety of attacks.
Types of Cryptography used in DLT
Cryptography is a vast field which is used in many other areas and not just in DLT’s or Blockchain. The types of cryptography are also numerous, however, for the purpose of this article we explain a few key types which are commonly used:
1. Public-key cryptography: This type of cryptography uses two keys, a public key and a private key. The public key is used to encrypt data, while the private key is used to decrypt it. This allows for secure communication between two parties, even if they do not trust each other.
2. Hashing: This type of cryptography is used to create a unique identifier for a piece of data. This identifier, called a hash, cannot be easily changed without changing the original data. This makes hashing ideal for verifying the authenticity of data.
3. Digital signatures: This type of cryptography is used to create a digital signature for a piece of data. A digital signature is like a fingerprint for data. It can be used to verify that the data has not been tampered with since it was signed.
Uses of Cryptography in DLT
The following are some of the ways that Cryptography is used in DLT:
1. To secure data: Cryptography is used to encrypt data so that it cannot be read by unauthorized parties. This is essential for protecting sensitive data, such as financial information or medical records.
2. To verify transactions: Cryptography is used to verify the authenticity of transactions. This is done by using digital signatures to ensure that the transactions have not been tampered with.
3. To create trust: Cryptography is used to create trust between participants in a DLT network. This is done by using public-key cryptography to allow participants to communicate securely with each other. It would not be incorrect to say that the credibility of Blockchain and Distributed Ledger Technology is owed directly to Cryptography.