What is encryption and its role in Blockchain?

To understand encryption in Blockchain we have to travel back to our concepts of cryptography. While Blockchain is like the building block for Bitcoin, cryptography is the driving force behind Blockchain. We all have heard about the immutable feature of Blockchain and that is majorly responsible for cryptography. In very simple terms, cryptography is popular for its information storage capacity and technology and the term refers to the umbrella of operations that it is capable of taking care of.

The thin line of distinction between cryptography and encryption

When we talk about encryption, we have to understand that it speaks of a particular special function of cryptography. So, on one hand, cryptography securely stores information that is difficult to alter without a unique key, and on the other, the codes that are encrypted in transactions are specifically called encryption.

Let us understand encryption in 5 points:

  1. It is the process by which data is scrambled so that there is a restriction on who can decode that data.
  2. Only people with authorization can understand the language of the encrypted data.
  3. In a more technical language, encryption converts regular texts to ciphertext. It changes meaningful data into something that looks completely random to unauthorized nodes.
  4. Encryption is successful when both the sender and receiver of the information conveyed have their unique encryption key.
  5. Encryption is all about maintaining data secrecy.

Next, we shall discuss the properties that any transaction should bear. From there we shall go on to understand the types of encryption and their use in Blockchain.

A transaction should be:

  • Confidential – this means that it should be well protected against unwanted interference.
  • Authenticated – it should be verified by other able nodes present in the network to maintain transparency.
  • Integrated – data should be completely devoid of malicious activity which means it shouldn’t be tampered with.
  • Non-negotiable – it must be clarified that once a transaction is processed, the party’s digital signature is on it which means they can never deny their involvement with that transaction.

Amongst these four properties, in a Blockchain, confidentiality is maintained by encryption algorithms and this is where the importance of its various types arise.

Encryption can be broadly classified into two types:

  1. Symmetric-key encryption – to encrypt and decrypt data, the same security key is used in this case.
  2. Public-key or asymmetric encryption – separate security keys are used in the case of public-key encryption.

Let us now look at some of the uses of cryptographic encryption in Blockchain Technology:

●      Avalanche effect

Any small change or alteration in the Blockchain will result in a huge effect in the sense that outputs will be starkly different and will come under the screens of verifiers.

●      Consistency

Hash functions look after the consistency of crypto transactions. Outputs will be similar if introduced to the hash function.

●      Unique Nature

Every transaction is essentially unique which means there will be no instances of double recording or cloning of blocks of information.

●      Faster speed

Thanks to encryption, transactions occur at faster speeds. The output that is generated is precise and fast, a good combination for Blockchain technology.

●      No reverse engineering

One cannot reach the input by coding the output, no matter how much they try. This is because encryption prevents reverse engineering, thus saving the network from easy malware attacks.

Encryption is also looking after the working of all major crypto trading visit website. All of its features are incorporated through the various scopes of Blockchain Technology.


Blockchain technology has been reigning in financial markets for quite some time now. Not only is the usage of Blockchain limited to cryptocurrency. A major role behind its popularity is played by encryption, without which Blockchain wouldn’t function the way it does. We are yet to reach that era when Blockchain will be necessary, but there’s no doubt that encryption and cryptography pose a bright future ahead of it.

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