Initially, Bitcoin contained three principles of encryption:
- Symmetric encryption;
- Asymmetric encryption;
Symmetric encryption implies the application of a specific secret encryption key before the message is sent to the recipient. Also, data transmission includes a decryption key to be activated when a message is received. For example, let's encrypt the alphabet with numbers: "A" is "01", "B" is "02", etc. A message like "HELLO" is encrypted with the code "0805121215", and this value will be sent over the network to the recipient. All unauthorized parties will probably see the encrypted message "0805121215", but will not get a clear understanding of what it means. The encryption method is everything.
Asymmetric encryption cryptography includes two types of keys: public and private keys.
Each private key in Bitcoin is related to a public key in a 1: 1 ratio. The private key exists to be private and inaccessible to anyone. The public key can be shared with anyone. One type of key acts as a user identifier, and the second is proof that a user is a person. However, unlike a password, a private key cannot be reset or recovered if lost. The private key is an extremely important piece of data.
Due to the 1: 1 principle, public and private keys are interconnected in a cryptographic context. Private keys in Bitcoin form a public key using a digital signature algorithm. The private key is the input to this algorithm and generates a corresponding public key. However, the public key is never reconstructed to generate the corresponding private key. This is due to the one-sided nature of this algorithm.
Hashing is used to check the integrity of transaction data on the network correctly. The method maintains the blockchain data structure, encodes people's account addresses, and allows block mining. In addition, digital signatures complement cryptographic processes, and authentic participants can verify their identity online.