July 24, 2024

Marcus Loven

IoT Innovations

Blockchain And Cryptography Primer — Part 1

4 min read


Blockchain is revolutionary in many ways: it’s massively scalable, completely decentralized and can be used to transfer value between parties. However, blockchains are meaningless without cryptography. In this first article of our series on the relationship between blockchain and cryptography, we’ll explore what both technologies are and how they work together in modern-day applications.

Blockchain And Cryptography Primer — Part 1

What is blockchain?

Blockchain is a distributed database of transactions. Each block contains a timestamp and a link to the previous block, forming an immutable chain of blocks. The database is made up of nodes that make up the network; each node has access to all transactions in real time, but only verifies those transactions for which it has been invited by another node on the network (to do so requires proof-of-work).

See? Easy!

How does it work?

To understand how blockchains work, it’s important to know that they are distributed ledgers. A distributed ledger is like a regular ledger in that it keeps track of transactions and assets. The difference is that rather than being stored on one central computer server (or “master node”), it exists across thousands or even millions of computers around the world at any given time.

In order to add new blocks onto the chain and make sure they’re linked together properly, each block contains something called a hash–a kind of unique digital fingerprint generated by applying an algorithm to its contents. Hashes are used for many things in cryptography; for instance, when you create an encryption key from your password using something called key derivation functions (KDFs), KDFs use hashes as part of their process too!

Cryptography — a brief history

Cryptography is the science of encoding and decoding information. The first known use of cryptography was by Julius Caesar who used it to send secret messages to his generals. In one instance, he wrote a message in code that said “Attack at dawn.” The second time he wrote out his message in plain text: “Attack at dawn.”

Hash functions — what they do and why they’re important

The most important thing to know about hash functions is that they’re the backbone of cryptography. They are used to create digital signatures and verify data integrity, but they can also be used to create a digital fingerprint of any data. A cryptographic hash function is an algorithm that takes input and produces an output with certain properties. For example, if we were to feed in “Hello World” as our input into SHA256 (one type of cryptographic hash function), it would return 256 bits (32 bytes) as its output:

Public-key cryptography

Public-key cryptography uses two keys, a private key and a public key. The public key can be shared with anyone, but the private key should remain secret.

The process of encryption involves using your private key to encrypt data and then passing that encrypted data along to someone else who wants to send you messages securely (or vice versa). You then use their public key to decrypt their message so that it’s readable again–but only by you!

Blockchains are the new internet, and cryptography is their DNA, but blockchains are meaningless without decentralized consensus and immutability, which means that cryptography is more important then ever.

The blockchain is the new internet. It’s a way to store, share and verify information in a decentralized manner. The key difference between blockchains and traditional centralized databases is that there is no central authority that controls all of the information on one single server (or “database”). Instead, each user has access to their own copy of all data stored across multiple nodes in an interconnected network. This makes blockchains much more resilient against hacking attacks since any attempt at tampering would require changing every copy at once–which isn’t feasible with today’s computing power levels or economic incentives for doing so!


So, what is blockchain? It’s a new way to store data and keep it secure. But there’s more to it than that — blockchains are also open-source networks that anyone can use to build applications. And they’re not just for payments anymore; they can be used in any industry where trust between parties is important or required (which is pretty much all of them).

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