bitCoin[background information]

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The heart of BitCoin is cryptographic protocol. This involves three main aspects: public key cryptography, digital signatures and cryptographic hashing. This is where the hard work of understanding comes in [don’t worry, it’s not that hard].

public-key cryptography

The distinguishing technique used in public-key cryptography is the use of asymmetric key algorithms, where the key used to encrypt a message is not the same as the key used to decrypt it. Each user has a pair of cryptographic keys – a public encryption key and a private decryption key. The public key is widely distributed, while the private key is known only to its proprietor.

The keys are related mathematically, but the parameters are chosen so that calculating the private key from the public key is either impossible or prohibitively expensive. Public-key algorithms are based on mathematical problems which currently admit no efficient solution that are inherent in certain integer factorization, discrete logarithm, and elliptic curve relationships.


Public-key encryption is like a locked mail box with a mail slot. The mail slot is exposed and accessible to the public – its location (the street address) is the public key. Anyone knowing the street address can go to the door and drop a written message through the slot. However, only the person who possesses the key can open the mailbox and read the message.

digital signature

A digital signature is a mathematical scheme for demonstrating the authenticity of a digital message or document. A valid digital signature gives a recipient reason to believe that the message was created by a known sender, such that the sender cannot deny having sent the message and that the message was not altered in transit.


Digital signatures are like the sealing of an envelope with a personal wax seal. The message can be opened by anyone, but the presence of the unique seal authenticates the sender, and proves no one has opened or changed the message.

cryptographic hash function

You can think of a hash function as a mathematical equation that takes an arbitrary block of data (like a name, phone number, paragraph etc.) and returns a fixed-size bit string – the cryptographic hash value – such that any (accidental or intentional) change to the block of data will change the hash value.


I give a tough math problem to my friend and claim I solved it. My friend would like to try it, but would like to be sure that I am not bluffing. Therefore, I write down my solution, compute its hash and tell my friend the hash value (while keeping the solution secret).
Then, when my friend comes up with the solution a few days later, I can prove that I had the solution earlier by revealing it and having my friend hash it and check that it matches the hash value given to him before.


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1 Comment

  1. ebey July 4, 2014 at 10:51 am

    what has happened to bitcoins…is it actually used somewhere in the world..or y has it not become a problem

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