Cryptography’s Role In Crypto | ZebPay

Cryptography is the very backbone of crypto’s security. It creates and secures the peer-to-peer architecture, which lends crypto its decentralized, secure, and nearly anonymous nature. We thought it is a good idea to explore the art and science of cryptography in the context of crypto to deepen your understanding of what makes crypto tick. 

What is Cryptography?

Imagine you and your friends inventing a secret code by tweaking words so outsiders couldn’t follow your conversation. Without realizing it, you were practicing a basic form of cryptography. At its core, cryptography is the science of hiding and revealing information so that only the intended person can understand it.

In today’s world, it’s everywhere—from emails to text messages. When a message is sent, cryptography transforms it from plain text into unreadable “ciphertext.” To anyone else, it looks like random nonsense, but the recipient can decode it using the correct key, restoring the original message securely.

In the context of crypto, cryptography ensures that transactions and participants remain secure, double-spending of a coin does not occur and all of this can happen without a central entity (such as a government or bank) overseeing the system.

Cryptographic Methods Used In Crypto Assets

Crypto assets use several customized variations of three main cryptographic methods to ensure safety and integrity:

1. Symmetric Encryption Cryptography

This is simple, relatively easy to crack, and therefore minimally used in core applications. In this, the exact same code has been used to encrypt and decrypt the data, and both parties have copies of the same cipher. It means that any eavesdropper cannot know what the message says. However, if they really wanted to crack the cipher, they’d only have to crack one. To add another layer of complexity, asymmetric encryption is used. 

2. Asymmetric Encryption Cryptography

This algorithm uses a pair of keys, one to encrypt and another to decrypt. This way, senders and recipients do not need to share the cipher with one another. Instead, an algorithm creates a pair of keys and sends one key each to the sender and recipient. The sender can only encrypt it and the recipient can only decrypt it.

3. Hashing

Cryptographic hash functions are complex mathematical algorithms that are used to encrypt data in such a way that it cannot be reverse-engineered. This is especially useful to convert private keys into public keys and to verify that public keys and private keys are paired. 

Crypto transfers rely heavily on public key encryption, which is a form of asymmetric encryption cryptography, and on hashing to ensure the integrity of the keys. 

Public Key Encryption

In this system, information is locked using a public key that anyone can access. However, unlocking it requires a matching private key, which is kept secret. The process also works the other way around—if data is encrypted with a private key, only the corresponding public key can open it. These keys aren’t simple passwords; they’re extremely long strings of numbers and letters, designed to be practically impossible to guess. While public keys can be openly shared, private keys must always remain secure and confidential.

An Analogy 

Imagine I want to send you a gift, but I need to make sure only you can open it. You send me a special lock that only your personal key can open. This lock represents your public key. I place the gift inside a box, secure it with your lock, and send it your way. Since only you hold the private key, you’re the only one who can unlock it. That guarantees the gift stays safe until it reaches you.

But there’s another challenge—how do you know it was really me who sent it? Since your public lock is out there for anyone to use, I add my personal stamp to the package. This stamp can only be created using my private key, and anyone can compare it with the pattern of my public key to confirm it’s genuine. By doing this, I prove that I was the true sender.

That’s essentially how public and private keys work in digital transactions: your public key lets people send you secure messages, while your private key ensures only you can open them. Meanwhile, signing with your private key and verifying with your public key makes it possible to prove authenticity and trust.

How Does Cryptography Support Crypto?

Cryptography is an elegant solution to ensure that cryptos remain free and fair. Crypto largely uses it for 3 actions:

1. Transaction Security

This includes algorithms that ensure data remains confidential, that its integrity is maintained, that it’s origin and legitimacy can be authenticated, and that all of these actions are performed in such a watertight manner that nobody can doubt the data. 

2. Generation of new currency units

Hugh powered computers mine new coins by solving complex cryptographic equations. These equations verify virtual currency transactions and then add them on the decentralised blockchain ledger to form a public record of crypto transactions.

3. Verifying transfers 

Since the identity of the sender and recipient are encoded in their public and private keys, which are generated and verified with cryptography, it’s an important tool to verify the authenticity of each transfer.

Cryptography forms the very backbone of crypto, giving it the strength, security, and trust that make it one of the greatest opportunities of our time. As Jacob Appelbaum famously said, “One must acknowledge with cryptography no amount of violence will ever solve a math problem.” By embedding every core function within cryptographic methods, crypto ensures that every transaction is not only secure but also universally verifiable as authentic.