Definition
Cryptography refers to the mathematical and computational practice of encoding and decoding data. Cryptography can ensure pseudo – or full anonymity depending upon the configuration.
Understanding the term
Online data is susceptible to several cyber threats, including theft and corruption. Cryptography solves this by protecting information from some of the risks associated with data storage and distribution. Cryptography has various use cases, such as the verification of the transfer of digital assets and tokens, controlling the generation of new currency units, and securing the various transactions occurring on the network.
Cryptocurrencies use cryptography techniques to emulate the concept of real-world signatures. Cryptographic proofs are applied to distributed networks that enable the creation of trustless economic systems. This has given rise to Bitcoin and almost all other decentralized currencies.
For instance, the Bitcoin protocol secures the network and ensures the validity of each transaction by using cryptographic proofs. There are multiple methods used for encryption in cryptography, such as symmetric encryption cryptography and asymmetric encryption cryptography.
Takeaway
Blockchain-based cryptocurrencies rely on cryptographic technology to maintain fidelity and security. Cryptocurrencies (such as Bitcoin) use three different cryptographic methods, including one for mining and another dedicated to generating its public-private key pairs.