The document provides an overview of the role of cryptography in blockchain technology, highlighting its importance for securing transactions and data integrity. It discusses different types of cryptography, including symmetric and asymmetric methods, as well as hashing techniques used in blockchain. Additionally, it covers the concept of cryptocurrency, its benefits, and the distinctions between centralized, decentralized, and distributed systems.
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Unit 1
The document provides an overview of the role of cryptography in blockchain technology, highlighting its importance for securing transactions and data integrity. It discusses different types of cryptography, including symmetric and asymmetric methods, as well as hashing techniques used in blockchain. Additionally, it covers the concept of cryptocurrency, its benefits, and the distinctions between centralized, decentralized, and distributed systems.
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UNIT I
Role of Cryptography in Blockchain Introduction to Cryptography
Blockchain Technology is based on three
main pillars; Distributed ledger, Peer-to-peer network, Cryptographic security. The successful and safe working of a distributed ledger system and the point-to- point network is impossible without a robust security technique. Introduction to Cryptography
Cryptography is a method of securing data
from unauthorized access. Cryptography is used to secure transactions taking place between two nodes in a blockchain network. Blockchain uses two types of security approaches - Cryptography and Hashing. Cryptography is used to encrypt messages in a P2P network. Hashing is used to secure the block information and the link blocks in a blockchain. Types of Cryptography Cryptography are further divided into two parts:
cryptography. Both parties have the same key to keep the secret. It is suitable for bulk encryption. It requires less processing power and faster Asymmetric-key cryptography (Public Key Cryptography)
Encryption method uses different keys for encryption
and decryption. Encryption method uses public key and private key methods. Public key method helps completely unknown parties share information like email ID. Private key helps to decrypt the messages and also helps in verifying the digital signature. Hash Cryptography Function in the Blockchain
Cryptographic hashing refers to coding the
information or data on blockchain into an unreadable, unhackable text. This is done using a special kind of hashing algorithm known as SHA-256 (Secure Hash Algorithm). It creates a 32-byte long hash value. The hash is always of a fixed length no matter what the length of the input value. But it is impossible to have the same hash values for different inputs. Hash Cryptography Function in the Blockchain
If Input data is “dataflair” the hash value
will be “07e42324292ec3bfc150958da854dd8d0 357b021dc5e4cfd75e65eed43bfe382” But if we change our input to “DataFlair” with two letters made capital, the hash will be: “64a5c3aade499eabcc677bd5445c84636 ea64fbf0c7c01a49e469ff05da179ef” Wallets and Digital Signatures
A blockchain wallet is a software
(e.g. Electrum, Bitcoin core) or even a special hardware device (e.g. Trezor, Ledger) that is used to keep transaction information and personal information (private and public key) of the user. Important ,wallets do not contain actual currency in it (e.g. Bitcoin, Ethereum). Wallets are just a secure place to keep one’s keys (especially private keys) and maintain a transaction balance. Wallets and Digital Signatures
That is, a wallet is only a communication tool and
the blockchain stores the real information/data/currency in blocks. Digital signature is like proof that given to the receiver and the entire network that nodes are a legitimate node in the blockchain network. When a node initiate a transaction with another node, node (Sender) have to create a unique digital signature by combining node transaction data and node private key using a special algorithm. This will guarantee the authenticity of sender node and the integrity of the information. Cryptographic Algorithm Symmetric Cryptography : Symmetric Ciphers are two types : Stream Ciphers and Block Ciphers. RC4 and A5 are commonly used stream ciphers. Data Encryption Standard (DES) and Advanced Encryption Standard (AES) are common examples of block ciphers. Cryptographic Algorithm Stream ciphers : A stream cipher is a algorithm of encrypting text (to produce ciphertext) in which a cryptographic key and algorithm are applied to each binary digit in a data stream, one bit at a time. Two types of stream ciphers: synchronous and asynchronous. Synchronous stream ciphers are ones where key stream is dependent only on the key. Asynchronous stream ciphers have a key stream that is also dependent on the encrypted data. Cryptographic Algorithm In stream ciphers, encryption and decryption are basically the same function I.e. XOR operation. Cryptographic Algorithm Block ciphers : Encryption algorithms that break up a text to be encrypted (plain text) into blocks of fixed length and apply encryption block by block. Block ciphers are usually built using a design strategy known as Fiestel cipher. Fiestel ciphers are based on the Fiestel network, which is a structure developed by Horst Fiestel. Structure is based on the idea of combining multiple rounds of repeated operations to achieve desirable cryptographic properties knows as confusion and diffusion. Cryptographic Algorithm DES is a prime example of Fiestel based ciphers Cryptographic Algorithm Simplified operation of a block cipher Modes of operation for block ciphers are Electronic Code Book (ECB), Cipher block chaining (CBC), Output Feedback Mode (OFB), or Counter mode (CTR). Block encryption mode Plaintext is divided into blocks of fixed length depending on the type of cipher used and then the encryption function is applied on each block. Keystream generation modes The encryption function generates a Cryptographic Algorithm Message authentication modes A message authentication code is computed as a result of an encryption function. MAC is basically a cryptographic checksum that provides an integrity service. Cryptographic hashes Hash functions are basically used to compress a message to a fixed length digest. Mode in which, block ciphers are used as a compression function to produce a hash of Cryptographic Algorithm Electronic code book This is a basic mode of operation in which the encrypted data is produced as a result of applying the encryption algorithm one by one separately to each block of plain text. Cryptographic Algorithm Cipher block chaining Each block of plain text is XORed with the previous encrypted block. The CBC mode uses initialization vector IV to encrypt the first block. It is recommended that IV be randomly chosen. Cryptographic Algorithm Counter mode : CTR mode effectively uses a block cipher as a stream cipher. In this case, a unique nonce is supplied that is concatenated with the counter value in order to produce a key stream. Cryptographic Algorithm Symmetric cryptography Data Encryption Standard (DES) Advanced Encryption Standard (AES) Asymmetric cryptography: RSA, DSA, and El-Gammal. Cryptocurrency Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units. Transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets. The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best. Cryptocurrency Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders. Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets. Cryptocurrency Ethereum: Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin. Litecoin: This currency is most similar to bitcoin but has moved more quickly to develop new innovations, including faster payments and processes to allow more transactions. Ripple: Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. Cryptocurrency Benefits : Funds transfer between two parties will be easy without the need of third party like credit/debit cards or banks. It is a cheaper alternative compared to other online transactions. Funds transfer are completed with minimal processing fees. A cryptocurrency transaction is generally a quick and straightforward process. Example, Bitcoins can be transferred from one digital wallet to another, using only a smartphone or computer. Cryptocurrency Benefits : Every cryptocurrency transaction is recorded in a public list called the blockchain, which is the technology that enables its existence. Blockchain aims to cut out intermediaries, such as banks and online marketplaces, which means there are no payment processing fees. Cryptocurrency payments are becoming more widely used, amongst large organizations, and in sectors including fashion and pharmaceuticals. Centralized vs Decentralized vs Distrib uted Systems Centralized vs Decentralized vs Distrib uted Systems Centralized Decentralized Distributed Sy stems Simple Less likely to Fault-tolerant Deployment. fail than Transparent Can be centralized and secure developed system. Promotes quickly Better resource Affordable to performance sharing. maintain. Allows for a Extremely Practical when more diverse scalable. data needs to and more be controlled flexible centrally. system. Centralized vs Decentralized vs Distrib uted Systems Centralized Decentralized Distributed Sy stems Prone to Security & More difficult failure. Privacy risks to deploy. Higher to users. Higher security & Higher maintenance privacy risks maintenance cost. to users. cost. Longer access Inconsistent times to data performance for users who when not are far from properly the server. optimized. Elliptic Curve Cryptography
Elliptic Curve Cryptography (ECC) is a key-based
technique for encrypting data. ECC focuses on pairs of public and private keys for decryption and encryption of web traffic. ECC is frequently discussed in the context of the Rivest–Shamir–Adleman (RSA) cryptographic algorithm. ECC, an alternative technique to RSA, is a powerful cryptography approach. It generates security between key pairs for public key encryption by using the mathematics of elliptic curves. Elliptic Curve Cryptography Elliptic Curve Cryptography ECC bases its approach to public key cryptographic systems on how elliptic curves are structured algebraically over finite fields. Therefore, ECC creates keys that are more difficult, mathematically, to crack. For this reason, ECC is considered to be the next generation implementation of public key cryptography and more secure than RSA. ECC is increasingly in wider use as websites strive for greater online security in customer data and greater mobile optimization Elliptic Curve Cryptography An elliptic curve is a plane curve over a finite field which is made up of the points satisfying the equation: y²=x³ + ax + b.