Bitcoin is a cryptocurrency. Buy the word cryptocurrency, and it might have been clear why the two-word bitcoin and cryptography are used in this same topic. You might think that we have discussed enough and know a lot about banking system, but what is cryptography and its function in the network of bitcoin needs some more details to understand.
Cryptography: Cryptography is a procedure to maintain digital security by different mathematical techniques.It is like a strong protective measure on any digital application using it that no third-party or scammer can read the information of the application. Thus it remains protected and is very hard to hack. Some techniques like encryption and decryption, hash function, digital signature algorithm, etc., are the different working methods of cryptography.
Now, let’s know the different cryptographic measures and how they protect the whole bitcoin network and its transactions.
- Encryption and decryption: The digital coin circulates through the network througha coding system. When you make a transaction in the network, the original transactional data that is your input is transformed into a different language that is a coding language. The original data is called plaintext, and the transformed data is called ciphertext.
On the opposite side, the decryption technique is called the decryption technique when the ciphertext or the already transformed data turns into original data. It happens at the time of sending a transaction.
These two processes are used in the bitcoin network because it makes transactional data very hard to read. In the encryption process, the readable plaintext transforms into unreadable complex text that makes no sense if common people try to read it. So, the data is no more prone to hacking by online hackers. Thus the technology secures all bitcoin transactions.
- Hash function:It is another security measure that is also used at the time of a bitcoin transaction. The main use of this security technique is in bitcoin mining or verifying transactional blocks. Hash is a computational number containing a 64-digit hexadecimal number with numeric and alphabets. At the time of the transaction, the real input also transforms into hash numbers that the miners have to verifytomake it a valid transaction. Here the security is maintained.
The hash number is not the same in every bitcoin block, but it is similar to the largest hash algorithm, SHA-256. Each block contains different hash numbers, the miners’ target hash. By using huge computational power, the miners need to come up with a number that is the same or the closest smaller to the target hash, and over that, the only first hash number that meets the criteria will be the answer t the target hash. Thus the block of the bitcoin network gets verified.
- Digital signature algorithm:The significance of this signature is the same as the physical signature. It proves the authenticity of the owner of bitcoin. It has three parts that work together to meet the security goal. The three parts are the transactional data that is being signed, the public key of the person who signs the data, and the person or the signer.
The private key and public key keeps your account safe. When making any transaction, you use your private key, set the transactional details, and execute the transaction. Then, a message or signature proves the public key owner is the corresponding private key owner. At the same time, the message or the signature is also mathematical proof that the owner of both keys has input the same data, and thus the transaction is verified.
The interesting thing here is the digital signature can’t be copied or modified. Each transaction forms a new and unique digital signature that is a great security measure for the network of bitcoin.
The bottom line
So, this is how bitcoin technology completely secures its online network with the help of other technologies. Cryptocurrency investments are profitable, and the right crypto exchange platform plays an important role in this. That is a big reason people crazily use bitcoin for investments in https://immediate-profit.de/. A bit of sleuthing and a careful understanding of the different aspects of the crypto market will make it simplified.