When you think about the word cryptography your mind may wander into a world of spies and espionage but this term refers to secure communications techniques that ensure that only the sender and intended recipient of a message are able to view its contents.
Having existed far longer than cryptocurrencies, the term cryptography comes from the Greek word ‘kryptos’ which means hidden and in the world of cryptocurrencies it is used as a tool to encrypt, send and trade crypto safely, and record transactions over time without the need for any centralised authority.
Why is cryptography needed to secure cryptocurrencies?
One of the key selling points for Bitcoin and most other cryptocurrencies is its security and transparency thanks to the underlying blockchain technology that powers it. Cryptography is the key to this technology as it relies on cryptographic mechanisms such as hash functions to allow blockchains to store huge numbers of transactions and protect them from hackers.
For example, each transaction recorded on the blockchain is secured using encrypted data. To access your own information and buy and sell crypto securely, you will need to use a specific public and private key that is unique to you. If someone tries to tamper with data from any part of the blockchain, the change will result in a different piece of data that can then be compared to the original value to see if it is legitimate or compromised.