For those of you who are unsure of the definition, encryption refers to ‘scrambling’ your data, making it unreadable, using a mathematical algorithm. So if someone intercepts this encrypted data, they will essentially be met strings of numbers, and it some cases letters, that are complete, for lack of a better term - nonsense. Only someone with the right key can ‘unscramble’ it back into something useful. You can think of encryption in the physical sense like a padlock, except the padlock can only be unlocked in two ways: picking the lock (mathematics so complex, it would take modern supercomputers longer than the universe has even existed to unlock it.), or with the actual key specifically designed to unlock the padlock.
Bitcoin uses two cryptographic encryption systems:
- SHA-256 which secures transaction history.
- Elliptic Curve Digital Signature Algorithm or ECDSA, which protects your private keys and wallet ownership.
ECDSA security relies on the fact that deriving a private key from a public key, requires solving something called “the elliptic curve discrete logarithm” problem, which is a task that is almost impossible for even supercomputers to complete in any reasonable timeframe. Calculations that could literally take billions of years.
However, a powerful quantum computer running something called “Shor’s Algorithm” (which I will dive into in a future article) could theoretically derive private keys from public keys. And this is why quantum computers pose a risk.
