Role of Cryptography in Blockchain

What is the Role of Cryptography in Blockchain?

By Peter Handscomb | blockchain-tech | 25 Apr 2022

Cryptography in blockchain is the main and core element that makes it a robust technology. Whatever you might have heard of the features of blockchain such as immutability, data security, all these major abilities come from cryptography. 

We all know that blockchain technology provides high data security, reliability, immutability, reduced costs, and better transparency to the system. This is because of the cryptography that makes blockchain development a powerful and reliable technology solution for businesses. 

If you want to use blockchain technology in your business solution, you should know what role cryptography plays in blockchain so you can effectively utilize the advantages of this growing technology.

What is cryptography?

Cryptography is the practice of technical activity of transferring safe and encrypted data or messages between two or more users. It primarily makes the digital currency transactions secure, trustless, and pseudonymous eliminating the need for third-party involvement in the transactions. 

The word 'crypto' in cryptography means 'secret' in Greek and 'graphy' comes from the Greek word 'Graphein' which means 'to write. So the term means the act of writing a secret message that is hidden from external view. With cryptography, the sender 'encrypts' the message making it hidden or invisible to a third party or any external source, and the receiver "decrypts the message privately making it legible again. 

Hence, the core function of cryptography is to encrypt data or any piece of information and only allow it to be accessed by a pre-defined receiver. 

Terminologies in Cryptography

  1. Encryption: It is the act of converting a normal text into a complex or illegible text (random sequence of computer bits).
  2. Key: A small portion of data is needed to induce the output of the cryptographic algorithm.
  3. Cipher: It is a cryptographic algorithm that is used for data encryption. 
  4. Decryption: It is the reverse process of encryption-converting encrypted data into legible text. 

What are the types of Cryptography?

There are primarily three ways a blockchain developer can execute cryptography algorithms-

  1. Symmetric-Key Cryptography
  2. Asymmetric-Key Cryptography
  3. Hash Functions

Role of Cryptography in Blockchain

Blockchain mainly uses two types of cryptographic algorithms- asymmetric-key algorithms, and hash functions. 

How Hash functions help in blockchain

Hash function algorithm is used to enable the functionality of a single view of blockchain to every user. Blockchains utilize the RIPEMD-160 and SHA-256 hashing algorithms as the hash function in the application or system. Below are the benefit that hash functions give to the blockchain

  1. Avalanche effect: It enables the application to detect the slight change in data which results in a bigger different output. 
  2. Deterministic: It gives the same output to any input if a transaction or data has been passed through the same hash function. 
  3. Quickness: It enables the system to generate output in a very less amount of time.
  4. Uniqueness: To create a unique output for an input.
  5. Reverse engineering is not permitted: Blockchain developers can not produce the input by having the output and the hash function.


How Asymmetric-Key Help in Blockchain

In this cryptographic algorithm, the private key is generated by a random number algorithm. This public key is calculated by applying an irreversible algorithm. 

The main advantage of the Asymmetric-Key encryption algorithm is that it has separate public and private keys. And these keys can be shared over unsecured channels. 

However, it also comes with some disadvantages. It has a slow processing speed and unsatisfactory encryption strength. Along with this, blockchain developers have to ensure the security of the asymmetric encryption algorithm in the course of transmission of data on the blockchain network. 

In addition to this, asymmetric-key cryptography empowers blockchain technology with highly secured digital signatures. Since modern businesses mostly have to rely on digital signatures, this algorithm helps blockchain in creating secure, easily verifiable, and non-corruptible digital signatures. 

Major Benefits of Cryptography in Blockchain

High Security

Cryptography allows the blockchain to record root hashes with every transaction safely coded. It means when an external party attempt to tamper with data from any part of the blockchain network, this change will be translated into a completely different hash at the root hash.  As a result, users can compare the root rash to the root hash on their computer network and detect the data has been compromised. 

In this way, cryptography allows blockchain to make a system secure. Cryptography is the core part that makes the blockchain ledger provides security features. 


Cryptography gives blockchain the capability to record limitless transactions securely across the network. It combines several transactions into one hash, giving a system better scalability. 


Since cryptographic hashing is irreversible it does;t allow any external party or user to alter the recorded transaction. This algorithm keeps data fully protected from any cyber-attack and thus ensures all users get a 100% authentic exchange of information on the digital ledger. 

To Conclude

Cryptography is the core of the blockchain. It empowers this technology with many unique and significant abilities that make it possible to create and implement secure, hidden, and trustless transactions on various networks. When you understand how cryptography works in blockchain, you get the intelligence to effectively use blockchain in your business solutions. 

However, you are not expected to ab an expert in this domain. The best way to intelligently use the benefits of blockchain technology is to partner with a professional blockchain development company. Hire highly experienced blockchain developers who can build an effective and reliable blockchain-based solution for your project.

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Peter Handscomb
Peter Handscomb

Blockchain Consultant At MobileCoderz


Blockchain Tech provides daily news, articles related to blockchain. AI, Cryptocurrency, and others

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