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Cryptography in Blockchain

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  • Last Updated : 20 Sep, 2022
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One of the important questions that always comes to our mind is How blockchain is secure? and What makes blockchain secure? Blockchain security is built on two concepts Cryptography and Hashing. This article focuses on discussing these two important concepts in detail.

Cryptography in Blockchain

Cryptography is a method of securing data from unauthorized access. In the blockchain, cryptography is used to secure transactions taking place between two nodes in a blockchain network. As discussed above, in a blockchain there are two main concepts cryptography and hashing. Cryptography is used to encrypt messages in a P2P network and hashing is used to secure the block information and the link blocks in a blockchain. 

Cryptography primarily focuses on ensuring the security of participants, transactions, and safeguards against double-spending. It helps in securing different transactions on the blockchain network. It ensures that only the individuals for whom the transaction data is intended can obtain, read and process the transaction. 

Role of Cryptography in Blockchain

Blockchain is developed with a range of different cryptography concepts. The development of cryptography technology promotes restrictions for the further development of blockchain. 

  • In the blockchain, cryptography is mainly used to protect user privacy and transaction information and ensure data consistency. 
  • The core technologies of cryptography include symmetric encryption and asymmetric encryption. 
  • Asymmetric cryptography uses digital signatures for verification purposes, every transaction recorded to the block is signed by the sender by digital signature and ensures that the data is not corrupted. 

Cryptography plays a key role in keeping the public network secure, so making it fit to maintain the integrity and security of blockchain. 

Cryptography

Cryptography is a technique or a set of protocols that secure information from any third party during a process of communication. It is also made up of two Greek terms, Kryptos term meaning “hidden” and Graphein, a term meaning “to write”. Some terminologies related to Cryptography:

  • Encryption: Conversion of normal text to a random sequence of bits.
  • Key: Some amount of information is required to get the information of the cryptographic algorithm.
  • Decryption: The inverse process of encryption, conversion of a Random sequence of bits to plaintext.
  • Cipher: The mathematical function, i.e. a cryptographic algorithm which is used to convert plaintext to ciphertext(Random sequence of bits).

Types of Cryptography

The two types of cryptography are:

  • Symmetric-key cryptography.
  • Asymmetric-key cryptography.

Let’s discuss each of these topics in detail.

1. Symmetric-key Encryption: It focuses on a similar key for encryption as well as decryption. Most importantly, the symmetric key encryption method is also applicable to secure website connections or encryption of data. It is also referred to as secret-key cryptography. The only problem is that the sender and receiver exchange keys in a secure manner. The popular symmetric-key cryptography system is Data Encryption System(DES). The cryptographic algorithm utilizes the key in a cipher to encrypt the data and the data must be accessed. A person entrusted with the secret key can decrypt the data. Examples: AES, DES, etc.

Features:

  • It is also known as Secret key cryptography.
  • Both parties have the same key to keeping secrets.
  • It is suited for bulk encryptions.
  • It requires less computational power and faster transfer.

Symmetric Cryptography

2. Asymmetric-key Encryption: This cryptographic method uses different keys for the encryption and decryption process. This encryption method uses public and private key methods. This public key method help completely unknown parties to share information between them like email id. private key helps to decrypt the messages and it also helps in the verification of the digital signature. The mathematical relation between the keys is that the private key cannot be derived from the public key, but the public key can be derived from the private key. Example: ECC,DSS etc.

Features:

  • It is also known as Public-key cryptography.
  • It is often used for sharing secret keys of symmetric cryptography.
  • It requires a long processing time for execution.
  • Plays a significant role in website server authenticity.

Asymmetric Cryptography

Wallets And Digital Signatures

A blockchain wallet is a special software or a hardware device that is used to keep the transaction information and personal information of the user. Blockchain wallets do not contain the actual currency. The wallets are used to keep private keys and maintain a transaction balance. 
Wallets are only a communication tool to communicate to carry out transactions with other users. The real data or currency is stored in blocks in the blockchain.

Digital signatures are like proofs that the user gives to the recipient and other nodes in the network to prove that it is a legitimate node in the network to carry out transactions. While initiating a transaction with other nodes in the blockchain network, the user first has to create a unique digital signature by combining the transaction data with the user’s private key using a special algorithm. This process will guarantee the authenticity of the node and the integrity of the data.

Cryptography Hash Function in Blockchain

One of the most notable uses of cryptography is cryptographic hashing. Hashing enables immutability in the blockchain. The encryption in cryptographic hashing does not involve any use of keys. When a transaction is verified hash algorithm adds the hash to the block, and a new unique hash is added to the block from the original transaction. Hashing continues to combine or make new hashes, but the original footprint is still accessible. The single combined hash is called the root hash. Hash Function helps in linking the block as well as maintaining the integrity of data inside the block and any alteration in the block data leads to a break of the blockchain. Some commonly used hashed function is MD5 and SHA-1.

Properties of Cryptographic Hash:

  • For a particular message hash function does not change.
  • Every minor change in data will result in a change in a major change in the hash value.
  • The input value cannot be guessed from the output hash function.
  • They are fast and efficient as they largely rely on bitwise operations.

Benefits of Hash function in Blockchain:

  1. Reduce the bandwidth of the transaction.
  2. Prevent the modification in the data block.
  3. Make verification of the transaction easier.

Use of Cryptographic Hash Functions

As the blockchain is also public to everyone it is important to secure data in the blockchain and keeps the data of the user safe from malicious hands. So, this can be achieved easily by cryptography. 

  • When the transaction is verified through a hash algorithm, it is added to the blockchain, and as the transaction becomes confirmed it is added to the network making a chain of blocks. 
  • Cryptography uses mathematical codes, it ensures the users to whom the data is intended can obtain it for reading and processing the transaction. 
  • Many new tools related to the application of cryptography in blockchain have emerged over the years with diverse functionalities.

Benefits of Cryptography in Blockchain

There are a huge number of benefits of cryptography in blockchain some of them are stated below:

  • Encryption: Cryptography uses asymmetric encryption to ensure that the transaction on their network guards the information and communication against unauthorized revelation and access to information.
  • Immutability: This feature of cryptography makes it important for blockchain and makes it possible for blocks to get securely linked by other blocks and also to ensure the reliability of data stored in the blockchain, it also ensures that no attacker can derive a valid signature for unposed queries from previous queries and their corresponding signatures.
  • Security: Cryptography makes the records of transactions easier using encryption of data, and accessing of data using public and private keys. Cryptographic hashing tampering with data is not possible, making blockchain more secure. 
  • Scalability: Cryptography makes the transaction irreversible giving the assurance that all users can rely on the accuracy of the digital ledger. It allows limitless transactions to be recorded securely in the network.
  • Non-repudiation: The digital signature provides the non-repudiation service to guard against any denial of a message passed by the sender. This benefit can be associated with collision resistance i.e.; since every input value has a unique hash function so there is no clash between the messages that are sent and one message can be easily differentiated from the other.
  • Prevent hackers: The digital signature prevents hackers from altering the data because if the data changes, the digital signature becomes invalid. With the help of cryptography, it protects the data from hackers and makes cryptography in blockchain unstoppable.

Limitations of Cryptography in Blockchain

Below are some of the limitations of cryptography in the blockchain:

  • Information difficult to access: Strongly encrypted and digitally signed information can be difficult to access even for a legitimate user at the most critical time of decision-making. The network can be attacked and rendered non-functional by an intruder. 
  • High availability: It is one of the fundamental aspects of information security, and cannot be ensured through the use of cryptography. Other methods are needed to guard against the threats such as denial of service or complete breakdown of the information systems.
  • No protection against vulnerabilities: Cryptography does not guard against the vulnerabilities and threats that emerge from the poor design of protocols, procedures, and systems. These issues need to be fixed with the proper design of the defense infrastructure.
  • Expensive: Cryptography needs huge time and money investments. Public key cryptography needs setting up and maintenance of public key infrastructure which requires huge investment. Addition of cryptographic techniques while sending messages and information processing adds to the delay. 
  • Vulnerability: The security of cryptographic techniques depends on the complexity and difficulty of the mathematical problem. Any breakthrough in solving such mathematical problems can make cryptographic techniques vulnerable.

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