Cryptography has a long history
Cryptography has a long history, dating back thousands of years.
At its heart, the principle definition has remained the same even while technological advances have radically modernized cryptography.
It is the discipline or science of keeping data and messages secure (or secret) while communicating and/or transmitting them over an insecure route or through a vulnerable medium.
Historically speaking, the use of cryptography heavily influenced the course of action in both World War I and World War II.
Since then, cryptography has made huge advances into the digital space.
The Bitcoin network uses cryptography as its primary security measure.
While transacting bitcoin, cryptography comes into play when describing the role of the Secure Hash Algorithm (SHA).
This is a cryptographic algorithm designed by the National Security Agency (NSA).
In order for a user to obtain his or her public keys, the corresponding private key is fed into SHA-256.
This generates the public key, which is then fed back into the SHA-256 to generate the public address.
The SHA256 algorithm takes a string of data of any length and transforms it into exactly 256 bits – that is, a series of 256 1s and 0s.
Another innovation of Satoshi Nakamoto is the digital signature, which is actually not only unique to every block but also contains links to the previous blocks that make its transactions irreversible.
Digital signatures are another example of the kind of cryptography used in the Bitcoin network.
The digital signature is the result of a mathematical formula (or, cryptographic hash algorithm), known as SHA-256 (refer to ‘Cryptography’ for more information on the SHA).
A file of data is accepted and scanned through this cryptographic algorithm, generating an output of 64 alphanumeric characters.
This output is known as the digital signature.
Keep in mind that the length of this alphanumeric code will always be 64 characters, regardless of the length of the received data file, and that every digital signature always begins with 4 zeroes.
To make things even more secure, the system is designed so that if just one character is changed in the data, the SHA-256 algorithm will generate an entirely different signature.
If a user was attempting to trick the system by changing the amount of bitcoins he received from the sender, the corresponding digital signature would change as well, including all the previous signatures since the beginning of time.
This makes it impossible for users to trick the system, which creates another layer of security.