What is Cryptography?

By Julia Cook
Published Jun 21, 2022 and Updated Mar 21st, 2023

Cryptography refers to techniques that allow for an individual or network to transfer, alter and store electronic data in a secure and private way.

Cryptography is a type of digital security technology that is intended to protect the users’ data from being tampered with by bad actors, lost or corrupted. It entails using an algorithm that transforms data into a code. This is called encryption. Decryption is the process of decodifying the encrypted data. How this is implemented depends on the cryptographic algorithm used for the encryption process.

What Does Cryptography Mean in Blockchain Terms?

In blockchain technology, cryptography is the decentralized encryption and decryption process that is used to securely lock transfer and confirmation data between nodes in the network within the blockchain itself. In the blockchain word, hackers and other bad actors are referred to as ‘adversaries.’ They are the ones who would traditionally attempt malicious attacks on blockchain users, such as phishing scams, double-spending, spam messaging and hacking into e-wallets to syphon funds from the e-wallet holder.

Blockchain technology typically uses a cryptographic method known as hashing. This involves data such as a transfer or authentication request, being inputted, which is transformed into a string of values that can only be decrypted with the permission of the owner of the information. The string of text that is produced by hashing is called a ‘hash value.’ There are eight main hashing algorithms that are usually applied to blockchains. These algorithms are triggered by the hashing algorithm’s consensus protocol.

Additionally, when transactions occur off the blockchain, such as where cryptocurrency is transferred to different wallets, and asymmetric cryptographic method is used. This is where a link between the public blockchain and the private domain are linked for a once-off transaction or verification of data. This is known as an asymmetric key pairing, as even though the public key is hashed on the public blockchain, the hashed code can only be decrypted by the private key, as per the hashed code’s programming.