Part 2 — Blockchain 101
In the previous part, we had a broad view of blockchain technology and how it is structured.
We identified the key, core elements that make the blockchain such an interesting technology and so disruptive for so many fields, for its potential use cases and transparency.
One, and perhaps the most important core component is the Cryptography (derived from the Greek word kryptos, which means hidden) and is nothing less than the science of sending messages back and forth from one party to another in the presence of ADVERSARIES or BAD ACTORS participants who wish to CORRUPT the content of the message.
There are five primary functions of cryptography:
. Privacy/confidentiality: Ensuring that no one can read the message except the intended receiver;
. Authentication: The process of proving one’s identity;
. Integrity: Assuring the receiver that the received message has not been altered in any way from the original;
. Non-repudiation: A mechanism to prove that the sender really sent this message;
. Key exchange: The method by which crypto keys are shared between sender and receiver.
It is closely associated with encryption, which is the act of scrambling ordinary text into what’s known as ciphertext and then back again upon arrival.
Cryptography is therefore, a 2-way function with 4 key components:
- the SECRET = the data which we are trying to protect;
- the KEY = a piece of data used to encrypt and decrypt the secret;
- the FUNCTION = an algorithmic function (called “hash”) used to encrypt the message;
- the CIPHER = the encrypted secret data (aka the output of the function).
Ancient Egyptians were known to use these methods in complex hieroglyphics, and Roman Emperor Julius Caesar is credited with using one of the first modern ciphers.
In today’s computer-centric world, cryptography is an indispensable tool for protecting information in computer systems, and the simplest method of cryptography uses the symmetric or “secret key” system.
Here, data is encrypted using a secret key, and then both the encoded message and secret key are sent to the recipient for decryption.
If the message is intercepted, a third party has everything they need to decrypt and read the message.
To address this issue, cryptologists devised the asymmetric or “public key” system. In this case, every user has two keys: one public and one private. Senders request the public key of their intended recipient, encrypt the message and send it along. When the message arrives, only the recipient’s private key will decode it — meaning theft is of no use without the corresponding private key.