Cryptography is the study and practice of sending secure, encrypted messages between two or more parties. Cryptography allows digital currency transactions to be pseudonymous, secure, and “trustless” – with no bank or other intermediary required.
The “crypto” in the word “cryptocurrency” means “secret” in Greek – which gives you a clue as to what the field of cryptography is all about. Cryptography is the study and practice of sending secure, encrypted messages or data between two or more parties. The sender “encrypts” the message, which obscures its content to a third party, and the receiver “decrypts” the message, making it legible again.
Cryptocurrencies use cryptography to allow transactions to be anonymous, secure, and “trustless,” which means you don’t need to know anything about a person to safely make transactions with them – and you don’t need bank, credit-card company, government, or any other third party in the middle. And cryptography isn’t just important for digital money — our computer and the networks it’s attached to are encrypting and decrypting data constantly, from every Google search you make to every email you send.
Cryptocurrencies are entirely based on cryptographic ideas. Bitcoin was invented by a pseudonymous person (or group of people) going by the name of Satoshi Nakamoto, who proposed the idea in the form of a whitepaper posted to a cryptography message board in 2009.
The thorniest issue that Nakamoto solved was something called the double-spend problem. Because Bitcoin is just code, what’s to stop a person from making and spending multiple copies of their money? Nakamoto’s solution was based on a well-known encryption arrangement known as public-private key encryption.
Bitcoin (as well as Ethereum and many other cryptocurrencies) uses a technology called public-private key encryption. This allows them to be “trustless” – and makes secure transactions between strangers possible without a “trusted intermediary” like a bank or Paypal in the middle.