How cryptography and cryptocurrencies are related

How cryptography and cryptocurrencies are related

Behind the Seven Seals. How cryptography and cryptocurrencies are connected
Messengers, fare, and digital money. Where, how and why encryption is used

Every year cryptography quietly penetrates our lives stronger and stronger: Wi-Fi, digital television, messengers, subway passes, e-passes, online banking – this is just a small part of the huge list of services and services that now use encryption. However, last year, for the most part, everyone is talking not about these spheres of application, but about cryptocurrencies (bitcoin, LiteCoin, Dash, etc.) and blockchain, the stories about which are made by central TV channels, and the volatility of the rate is discussed not only by stock exchange analysts, but also by schoolchildren, doctors and pensioners.

The state and the financial sector are now deciding what to do with digital currencies. Judging by the latest official statements, blockchain technology itself is of great interest because it makes it possible to reduce costs in different areas of the economy. The banking and financial sectors are actively interested in blockchain. Various solutions are already being tested and implemented. However, opinions on cryptocurrencies are not so unipolar. There are many variants of their regulation: from complete prohibition to refusal of control. We answer the main questions about cryptography, its connection to cryptocurrencies and how it is treated in different countries.

What is cryptography?

The history of any state has always been associated with a huge number of important secrets that had to be protected from outsiders and even their own. It was necessary to encrypt information in such a way that only a person with a special code could understand it. Over time, cryptography became more and more sophisticated, and cryptography – the science of confidentiality methods – was born.

Earlier, both encryption and decryption used the human brain, but later there appeared electromechanical devices like the Enigma machine, whose code breaking by Alan Turing (the story is the basis of the film The Imitation Game, starring Benedict Cumberbatch) is said to have brought the victory in World War II a few years closer and saved millions of lives. Today, however, mathematical cryptography, where electronic chips do all the work, has taken center stage.

How has encryption historically been regulated?

During the XX century, cryptography for private use was tried to be banned more than once. The main apologists for this approach were the security services, which argued the need for a ban by fighting all internal and external threats, be it terrorism, hackers or ordinary criminals. After all, encrypted messages are virtually impossible to decipher promptly without expending enormous resources. Opponents of this position relied on the fact that the intelligence services are trying to gain maximum control over all means of transmitting information. The debate continues to this day.

How is bitcoin related to crypto?

Bitcoin, Litecoin, and Dash are all cryptocurrencies, that is, digital currencies whose creation and control are based on cryptographic methods. Elements of cryptography are used to ensure that the block chain cannot be altered, that is, the blocks are replaced or the information in them is changed.

Are cryptography and cryptocurrencies forever?

Thanks to cryptography, a lot of positive changes are happening in everyday life. In the near future, entirely new developments are sure to emerge that will find application in unexpected areas. However, when and if scientists complete the development of a quantum computer, current encryption methods will cease to be reliable, as it will be able to instantly decrypt any algorithm

Already, new methods of encryption algorithms are being developed and there are experimental encryption devices based on the principles of quantum mechanics. How soon we will see the commercial implementation of these projects is still unknown. At the moment, the laboratories have implemented some elements of the system, which can perform tasks of little complexity. But we can already say that these developments will give a new impetus to the development of the entire digital world.

Albert Gonzales

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