An analysis of the SC Decision in RBI Case
The Reserve Bank of India ('RBI') vide Circular - Prohibition on dealing in Virtual Currencies ('VCs') dated April 6, 2018 ('RBI Circular') ...
Encryption is a technical method of preventing sensitive or confidential data from falling into the wrong hands. When it comes to cryptocurrency messages and transactions, encryption and decryption between two parties ensure that a third party cannot decrypt or misuse the information.
Encryption in blockchain technology, on the other hand, is more difficult than password-protecting a file or adding two-factor authentication to a site. One of the qualities that make blockchain such an appealing technology for a variety of users is encryption.
You might have observed that "encryption" and "crypto" have the same root: "crypt." It has to do with cryptography, which is the process of anonymizing and securing sensitive data. Cryptocurrencies, in general, use encryption techniques to keep transactions private and secure. One of the key advantages of crypto, according to proponents, is its security.
Two parties can complete a transaction using blockchain cryptography without exposing their personal information or needing to go through a middleman like a bank or government. Different forms of encryption are used by different types of cryptocurrencies.
Consider receiving radio signals on the radio in your automobile, which allows you to listen to the broadcast. This broadcast is free to the public and available to anybody. Consider defense-level communications, such as that which occurs between soldiers on a combat operation. This information will be transmitted in a secure and encrypted manner. Instead of being broadcast to the entire world, it will only be received and known by the intended recipients. Cryptography in cryptocurrencies operates in a similar way.
Cryptography is a technique for sending secure messages between two or more participants in which the sender encrypts/hides a message using a type of key and algorithm, delivers this encrypted version of the message to the receiver, who decrypts it to generate the original message.
When users use the same key to encrypt and decrypt data, the system is said to be using symmetric encryption. This is referred to as "secret-key encryption" on occasion. Because this type of cryptographic system uses the same key to encrypt and decrypt data, it's referred to as a "common key." However, such a system is more vulnerable to a security breach.
An asymmetric system, on the other hand, employs two keys: a public key and a private key. The Bitcoin network is an asymmetric system because it provides users with a private key, which is then used to generate a public key. It is also known as "public-key encryption."An asymmetric encryption system would then work as follows: the public key can be used to encrypt or encode data, but users would need a private key to decrypt or decode the data. In other words, the public key converts plaintext to ciphertext, but the private key of the user converts the ciphertext back to plaintext.
Hashing makes no use of keys at all. Instead, it employs an algorithm to generate a "hash value" from the plaintext input. Hash functions are extremely secure, and the hash value generated frequently makes it difficult, if not impossible, for users to recover the plaintext that was previously encrypted. Because of the complexity of the technical process behind hashing, it can be utilized as a form of mining for some cryptocurrencies. The hash rate refers to the number of computational resources used on a network to contribute to the hashing process, and a high hash rate indicates that the network is secure.
Anonymity and concealment are important features of cryptocurrencies, and numerous cryptographic approaches ensure that users, as well as their activities, remain concealed on the network to the appropriate level.
When it comes to a secure cryptosystem, the only thing that should be kept "hidden" are the keys themselves. Take the necessary precautions to safeguard any keys that your systems rely on. Encryption keys should never be stored in transparent text alongside the data they protect. It's the same as locking the front door and hiding the key beneath the doormat. It'll be the first thing an attacker looks for.
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