Cryptography: A key to Blockchain Technology

Introduction

With the growing popularity of Bitcoin, “Chain of Blocks” is the phrase in Bitcoin’s whitepaper that captured the attention technology enthusiasts. It was presented by Satoshi Nakamoto as the fundamental structure in Bitcoin’s Blockchain. The phrase “Chain of Blocks” refers to the sequential and unalterable data of transactions. Cryptographic method of Hash Function is used to chain these blocks together. Beside using cryptography in modern technology, it has a long history in ciphering and deciphering of messages and information during and after WWII.

Evolution in this field of study led to the development of modern day blockchain. Whitfield Diffie and Martin Hellman’s contributions are considered as phenomenal with development of Public-key cryptography. The development was the result of criticism made on private-key cryptography. These concepts will be elaborated in the next sections of the writings.

What is Cryptography?

Data security is an important problem which cryptography solves. Security of data from unauthorized access is done by employing cryptographic techniques of Cryptography. Cryptography is an old method of developing secrecy of data. In general, cryptography contains encryption and decryption of text. In encryption, a normal text in converted into a cipher text or random sequences of bits. In decryption, reverse process of encryption is applied.

The types of cryptographic methods are mostly used. These are: Symmetric-key Cryptography and Asymmetric key cryptography.

• Symmetric Cryptography, also known as Private-key Cryptography, is a method in which a single key is used for application. The same very key is used for both encryption and decryption. This is an old method, and its security features are criticized.
• Asymmetric Cryptography, also known as public-key cryptography, brings phenomenal change in the field of online payment. In this method, for encryption and decryption, public and private key is used. Algorithms are used to generate private key, and unique public key using same public key.
• Hash function is different from the previous two. It does not use key of any sort. It is a unique identifier of any content. By using hash function, a piece of text or data of any sort is transformed into specific cipher text of any length. This process is not encryption because it is nearly impossible to recollect the data from hashes. Hashing function does not require decryption of text. Data simply converted, through algorithm, an unreadable output. The generated output is called hash digest, hash value or code which is a unique identifier. In simple, hash function has no key and plain text is not recoverable from plain text.

These concepts played an important role in development of modern day “Blockchain” technology.

Symmetric Key Cryptography: Process involved, and advantages and Challenges associated.

Also known as private-key cryptography, this type of cryptographic method uses single key for both encryption and decryption of ciphered data i.e., text, or transactions. During conversion process, data is transformed into an unreadable the same symmetric for the decryption of data and make it readable. This method is preferable for bulk data and requires less computational power and faster transfer.

This method of cryptography widely used by application, like credit card transactions, where credit card holder’s identity is kept secret and prevent him form any kind fraud. Common algorithms in this method are Advance Encryption Standard, and Data Encryption Standard.

Process Involved in Symmetric Cryptography

The following steps is taken to complete the process:

• First step in the process is private key generation. In this process, the generated private generated key is shared securely among sender and receiver. The following steps are involved in key generation:
• On the basis of security prerequisites, selection of key length is an important factor to consider. For symmetric encryption algorithms like AES, commonly used key lengths are 128, 192, and 256 bit.
• After selection of its length, generate random key using random number generator and ensure its unpredictability.
• After its generation, ensure its security and stored it using hardware module or secure key management system. The purpose behind this is to ensure its protection from unauthorized access.
• Last step is its distribution to targeted audience i.e., receiver.
• Second step is the encryption of text or data or any sort into ciphered message using a key. The following things are included:
• Plain text that needs to be encrypted.
• Encryption algorithms are used to take plain text or data and its key and converts it into a cipher text.
• The ciphered text is a random unreadable data that is sent to the desired network.
• Third step is the reverse process of second step. Ciphered text is taken by the receiver who converts it into a plain text using a key which is shared by the sender.

Although it is an old method of cryptography, but there are many advantages associated with this method that enables it for use. The speed factor is one of them. It is faster than public-key cryptography (Asymmetric Cryptography) and enables it for encryption of large data. It requires relatively low computational power when compared with asymmetric or public-key cryptography, and many well-established algorithms like AES and DES use private-key cryptography.

Along with its widespread usefulness, there are some challenges associated with symmetric key cryptography. After key generation, key distribution is a challenging task because it indispensable to used a medium which is not easily interceptive. When it comes to managing of keys in large systems, it becomes a challenge. The major drawback of this methodology which makes less valuable methodology in modern day technology is that every use of key produce information leakage. Keys can be reconstructed by hacker by using those leaks. Proper implementation and management of this system is indispensable when it comes to security of information.

Asymmetric Cryptography:

This method is also known as Public-key Cryptography. This method of encryption is introduced by Whitfield Diffie and Martin Hellman in their phenomenal work “New Directions in Cryptography”. This concept of cryptography was first practically implemented through the development of RSA algorithm by Rivest, Shamir, and Adleman. This method of cryptography uses both keys i.e., public and private key for both encryption and decryption of data. The public key is used for encryption and private for decryption.

When it come to official use of this method, both sender and receiver can create their public and private keys. These two keys are linked together i.e., message or data of any sort encrypted with private key can be decrypted with public key and vice versa. Four cases in message encryption are the following:

• If the sender uses his public key in message or data encryption, how will the receiver decrypt the message or data. Encryption of such message is only possible when sender shares his private key. Sharing of private key put the security in question.
• If sender uses his private key for encryption of message or data, then the message or data will be decrypted through the public key of the sender. Again, it raises the question of security because public key is available to other users and they can decrypt the message easily.
• Third case would be what if sender uses the private key of receiver in encryption of message. Officially private key is meant to be kept secret, and if receiver of message shares his key with the sender, then it will raise questions related to its security.

These three cases do not full the security requirement and purpose of asymmetric cryptography. Only the fourth one fulfills the security requirements

• The sender can only use the receiver’s public key for encryption of data of any sort. The receiver then uses his private key for message decryption. This keeps the message secret.

The general process involves the following:

• The users (both sender and receiver) generate pair of keys both private and public key.
• The public key is distributed freely on directories, websites or through third parties.
• Sender uses public key of receiver for encryption and transmission of message.
• Decryption process involved the use of private key of receiver.

The development of PKI (Public-key infrastructure), Digital signature, and ECC further enhances and expanded the usage of Asymmetric Cryptography.

Concluding remarks

Traders who are reluctant to trade cryptocurrency markets. It is important for them to understand what and how technology of Bitcoin works. These cryptographic methods are important for them to understand. Although modern day blockchain works differently, these simple concepts are base to Cryptocurrency because major chunks of bitcoin’s technology is adopted from these simple concepts. As a crypto trader, above explanation is enough for them understand. Excessive understanding of this technology is for the practitioner of this field.

Frequently Asked Questions (FAQs)