Cryptography in Blockchain

Blockchain is a peer-to-peer network; the term “blockchain” is composed of two separate terms “block” and “chain”. Blocks are called collections of data, alias data records, and chains are called public databases of these blocks, stored as lists. These lists are linked using encryption technology, which makes it the most basic requirement for creating a blockchain. The blockchain is a growing list of records, and over time, these blocks will be appended to the list.

Cryptography is a method of developing technologies and protocols that can prevent third parties from accessing private messages and obtaining data knowledge from them during communication. Cryptography is also composed of two ancient Greek words, namely Kryptos and Graphein. The first term means “hidden” and the latter word means “write”. Several terms related to encryption are as follows: 

  • Encryption: This is the process from plain text (ordinary text) to cipher text (random sequence of bits). 
  • Decryption: Encryption, the reverse process of converting ciphertext into plaintext.  
  • Cipher: Mathematical function, that is, a cryptographic algorithm used to convert plain text to cipher text.
  •  Key: A small amount of information required to induce the output of a cryptographic algorithm. 


To understand cryptography in blockchain, one must understand the types of cryptography. There are three main ways to implement cryptographic algorithms, namely symmetric key cryptography, asymmetric key cryptography and hash function. 

  1. Symmetric-Key Cryptography– In this encryption method, we take a single key into application. This common key is used for both the encryption as well as the decryption process. Using a common single key creates a problem of securely transferring the key between the sender and the receiver. It is also called Secret-Key Cryptography.
  2. Asymmetric-Key Cryptography- This encryption method uses a pair of keys, an encryption key, and a decryption key, named public key and private key respectively. The key pair generated by this algorithm consists of a private key and a unique public key that is generated using the same algorithm. It is also called Public-Key Cryptography. 
  3. Hash Functions- This type of encryption doesn’t make use of keys. It uses a cipher to generate a hash value of a fixed length from the plaintext. It is nearly impossible for the contents of plain text to be recovered from the ciphertext.


Use of Cryptography in blockchain:

Blockchain uses two types of cryptographic algorithms, asymmetric key algorithms and hash functions. The hash function is used to provide each participant with a single view of the blockchain. Blockchain usually uses SHA-256 hash algorithm as its hash function. 


  • Avalanche effect – A slight change in the data can result in a significantly different output.
  • Uniqueness – Every input has a unique output.
  • Deterministic – Any input will always have the same output if passed through the hash function.
  • Quickness – The output can be generated in a very small amount of time.
  • Reverse engineering is not possible, i.e. we cannot generate the input by having the output and the hash function.


Hash functions have a major role in linking the blocks to one another and also to maintain the integrity of the data stored inside each block. Any alteration in the block data can lead to inconsistency and break the blockchain, making it invalid. This requirement is achieved by the property of the hash functions, called the ‘avalanche effect’. 

The hash function plays a major role in linking these blocks to each other and maintaining the integrity of the data stored inside each block. Any changes in the block data may cause inconsistencies and break the blockchain, rendering it invalid. This requirement is achieved through the property of the hash function called the “Avalanche Effect”. 

According to this, if we only make minor changes to the input of the hash function, compared with the original output, we will end up with completely irrelevant output. Let’s take the SHA-256 hash function as an example to compare their output,

Input: Blockchain

Output (SHA-256 hash): fe7d0290395212c39e78ea24ba718911af16effa13b48d1f6c9d86e8355e0770

Input with slight change: BlockChain

Output (SHA-256 hash): 28b06f490201e35fb018a5cc26e8df16fd248a3476838b2598b38c187ec89089

After changing a single character in the input from lowercase to uppercase, you will notice a huge difference in the output. This makes the data reliable and secure on the blockchain. Any change in the block data will cause this difference in hash value and invalidate the blockchain and make it immutable. 


Blockchain technology has always been a key area for the development of all multinational companies, and in the past few years, a large number of startups are using this technology. Blockchain has not yet witnessed its mainstream use in society, but professionals have many opportunities to explore and develop careers in this field. One of them, of course, is cryptography in the blockchain. The cryptography in the blockchain is at the core of this technology, making it immutable and reliable. 

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