Cryptography - Valkyrie

Cryptography

Key takeaways

  • Cryptocurrencies got their name from the science of cryptography which is used to encrypt and secure transactions posted to public blockchains
  • As a larger amount of computing power is added to a given proof-of-work blockchain, the blockchain becomes more secure as the encryption algorithms increase in difficulty

Each public blockchain is designed to be global, distributed, and immutable.  Once a transaction is recorded on a blockchain, it can’t be changed.  Each miner or validator, those local operators who maintain a copy of the distributed ledger, records transactions to the blockchain. 

The term cryptocurrencies is derived from the idea that these networks are secured by cryptography, which encrypts data to ensure that it cannot be changed.  A focus of these cryptographic mathematical puzzles are hashes, an example of which is the 64 character output from bitcoin’s SHA-256 hash algorithm (f7225388c1d69d57e6251c9fda50cbbf9e05131e5adb81e5aa0422402f048162). 

The Bitcoin blockchain makes the cryptographic puzzles more challenging when more computing power is applied to the network to ensure that each puzzle takes about ten minutes for one miner in the world to find a valid solution.  That is, the Bitcoin blockchain becomes even more secure as the addition of new mining rigs to the network strengthens the degree of encryption.