What is encryption? 

Encryption is the process of taking plaintext and converting it into ciphertext or encrypted data so that only authorized parties can decrypt it. Essentially, the data is scrambled so that only authorized parties can read it. To understand encryption, we must first understand two basic concepts: Plain text vs. Ciphertext. 

Plaintext refers to information such as audio files, images, programs, or websites that can be read by humans or machines. Ciphertext refers to data that is encrypted, making it unreadable by humans or machines.

Encryption is the process of converting plaintext into ciphertext using an encryption algorithm in order to protect data such as passwords. Decryption is the reverse process of encryption in which only authorized parties can translate the ciphertext back into plain text so that it is readable. Encryption requires two components; firstly, it uses an encryption algorithm which is a mathematical formula that can scramble plaintext into ciphertext. Secondly, a key is generated by the algorithm that can be used to decrypt and secure data. A key is simply a string of random numbers and letters that are put into the algorithm to lock or unlock data.

Types of encryption:

There are two types of encryptions, symmetric and asymmetric encryption. The key difference is that symmetric systems use the same key to encrypt and decrypt data. Asymmetric systems use two keys, a public key that everyone can see and a private key that links to the public key allowing only the authorized party (private key holder) to decrypt the data.

In asymmetrical systems, the decryption algorithm mixes the public key and private key of both parties, plus the data to be sent. The public key of the receiver is identified as the deposit address of the data, and the private key, which is linked to the receiver’s public key, will be the only key authorized to decrypt the data.

Encryption in Cryptocurrencies

Cryptocurrency wallets are secured using asymmetric encryption. The public key (public address) is open to the public allowing users to send cryptocurrencies to a specific address. The private key allows users to verify and secure ownership of their cryptocurrencies.