Cryptocurrencies popularity have been imploding due to its ability to provide financial security and privacy without the need of regulated banks. With the rise of security online and privacy because of bad actors and institutional failure cryptocurrencies have emerged as alternative to standard financial systems . In this post, we will go into detail on how cryptocurrencies use cryptography to provide security and privacy for its users.
Cryptography: The Backbone of Cryptocurrencies (Security)
Cryptography is the science of secure communication, it what masks the code of your communication behind a puzzle that only can be solved with a certain key, this plays a crucial role in how cryptocurrencies work. Cryptocurrencies like Bitcoin, Ethereum and Monera use advanced cryptography algorithms to secure their interactions with different nodes; making them almost impossible to attack unless these nodes are taken over by 51%.
The blockchain technology that these currencies employ is a decentralized ledger that records all transactions made on the network. These transactions get made into a block every 10 minutes and is linked to the previous block making an unbreakable chain. Each block contains a cryptographic hash. This ensures that no one can alter or delete any transaction on the blockchain.
Privacy in Cryptocurrencies
One of the main benefits of cryptocurrencies is privacy. They allow you to make anonymous transactions without revealing your identity or personal information. This is useful for people who are worried about personal privacy and identity theft.
Most cryptocurrencies use a public and private key system to secure transactions this means that the public key which is outwards facing to everyone hence the name “Public” is used as the address to send currency too. The private key is what you use to access your crypto and send that currency to an address which only you know hence the word “private”. These transactions are not controlled by a central person but a decentralized node network that verifies transactions separately and checks these transactions against each other to make sure they are all correct.
Also these currencies main benefit is its resistance to inflation and bank runs they have a set amount of currency that can never be raised which reduces its price. Since everyone owns their own bitcoin in a hardware wallet or hot wallet it is impossible for bank runs.
Cryptocurrencies offer a level of financial privacy and security that is unparalleled in traditional financial systems. With the increasing importance of online security and privacy, cryptocurrencies have emerged as a viable alternative for people who want to keep their financial information private and secure. By using advanced cryptography algorithms, cryptocurrencies provide a decentralized, secure, and private financial system that is ideal for those who value their privacy.
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