What does the term 'cryptography' mean in blockchain?
Cryptography is a fundamental component of blockchain technology, serving multiple crucial roles that ensure secure transactions and data integrity, especially in the context of Bitcoin. At its core, cryptography involves techniques for securing communication and data against unauthorized access. In blockchain, it primarily deals with two key concepts: hashing and public-private key cryptography.
Hashing is used to create a unique digital fingerprint of the data contained in a block. Each block in the Bitcoin blockchain contains a hash of the previous block, thereby forming a secure chain that prevents any alteration of previously recorded transactions. This also ensures that any attempt to modify a block would result in the immediate invalidation of all subsequent blocks.
Public-private key cryptography allows users to securely send and receive Bitcoin. Each user has a pair of keys: a public key, which is shared with others to receive funds, and a private key, which is kept secret and allows the user to access and spend their Bitcoin. This system guarantees that only the owner of the private key can authorize transactions, thereby enhancing security and user control.
Overall, cryptography not only facilitates secure transactions in Bitcoin but also underpins the decentralized and trustless nature of blockchain technology, making it a cornerstone of the cryptocurrency ecosystem.