Although we have mentioned that cryptography is crucial to the success of blockchain technology, we haven't explored any topic in particular. Most cryptographic primitives have some role or other in the creation of a decentralized blockchain application. We will study all the primitives that contribute to blockchain in this chapter.

Hashing is used in most blockchain applications to create links between blocks. It is also used in consensus algorithms such as proof-of-work, which basically exploits the hashing power of the computing systems that form the blockchain network. Digital signatures are used to sign and verify events such as transactions. Asymmetric key cryptography is a core concept in blockchain applications that gives identity to the participants of the network or can prove the ownership of assets.

Hence, cryptography is an excellent...

In this section, we'll look at a number of cryptographical techniques that have been used in historical ciphers. These ad hoc ciphers are not secure enough to be used in modern applications, but because of their simplicity, they can encourage us to learn more about cryptography. Exploring the weaknesses of classical cryptography also helps us to learn more about some of the principles of cryptography. Take a look at the following diagram:

Figure 2.1 shows the conventional encryption model used to encrypt a plaintext using a secret key that is shared with the other user over a secure channel. The user who wants to read the text will decrypt the ciphertext using the secret key, which will return the original plaintext. The key is private, and the encryption and decryption algorithms are made public because...

Cryptographic primitives are low-level cryptographic algorithms that are used to construct cryptographic protocols used by applications. These are the building blocks of designing a cryptographic system. A designer planning to implement a cryptographic protocol in a system doesn't have to worry about the low-level abstraction of the primitives and can concentrate entirely on building the application:

Figure 2.2 shows a detailed classification of cryptographic primitives. Blockchain technology makes use of most of these cryptographic primitives to achieve basic blockchain functionalities and secure data on the decentralized network: asymmetric cryptography for managing keys; digital signatures for transactions; and, most importantly, hashing, which is the backbone of the blockchain, are some of the...

The symmetric key is a key-based cryptography whose algorithms use the same keys to perform encryption of plaintext and decryption of the ciphertext. These keys are shared between two parties over a secure channel. Any participant owning the shared key can perform both encryption and decryption operations on the data. A symmetric key cipher can either be stream encrypted or block encrypted.

Symmetric key cryptography doesn't play any significant role in blockchain-based applications. However, it will provide a better insight into key-based cryptography before we look into asymmetric cryptography.

The stream cipher uses symmetric key cryptography. Each plaintext character is encrypted...

Asymmetric key cryptography is a widely used encryption technique in modern cryptography. It has a lot of applications other than encryption. It is also commonly used in several elements of blockchain, so we will cover this cryptography technique in depth, along with its primitives.

Symmetric key cryptography uses a shared key for both encryption and decryption. The biggest problem with this is that the shared key needs to be exchanged between participants over a secure channel, which can be quite hard to achieve. It also defeats the objective of encryption if we have a secure channel for communication in the first place. This is where asymmetric cryptography comes in. It uses a pair of keys called a public/private pair. The public key is constructed from the private key and can be freely broadcasted to other users.

A cryptographic hash function is a type of function that maps arbitrary sized data to a fixed size string called a hash. Hash functions possess certain properties that make them ideal for use in cryptography.

We have repeatedly mentioned that hashing is the backbone of blockchain architecture, and it has several properties that make it really valuable and ideal for blockchain implementation.

Every hash function has the...

Encoding schemes are generally used in data storage or the transmission of textual data over a medium. You can often observe the conversion of binary to text-encoding schemes in primitive cryptographic implementations.

Encoding schemes provide a compact way of representing long sequences of characters using a base. For example, a decimal system uses base 10, which uses characters from 0-9, and a hexadecimal system uses additional characters from A-F, along with the numbers from the decimal system. The bigger the base of a system, the smaller the size of the encoded string.

Base64 is an encoding scheme that is widely used to store and transmit large files such as an image. It uses 26 lowercase letters, 26 uppercase letters, 10 numerical characters, and 2 special characters ("+" and "/").

Base58 is an encoding scheme developed for Bitcoin and...

This chapter covered all the essential cryptography topics, from classic cipher techniques to advanced cryptographic primitives. We began the chapter by discussing the classical cipher techniques. We explored both symmetric and asymmetric cryptography, along with a few examples. Cryptographic primitives, such as hashing and digital signatures, were covered in greater detail as they will act as the foundation for the blockchain concepts covered throughout this book.

Since we have covered some of the essential concepts in cryptography and looked at their respective applications, in the next chapter, we will try to implement some of the cryptography concepts that are applicable to the blockchain protocol by looking at a simple blockchain example.