What's your cryptocurrency IQ? Most people have heard of Bitcoin by now but maybe you're a little more advanced than that. Maybe you've been dabbling with Ethereum, Ripple, OmiseGo or YouToken. That may all be true but do you understand what cryptography is? You can go your whole crypto career without worrying about it but why would you? After all, knowledge is power so break out the notebook and let's start studying.


In a historical sense, cryptography is a unique method for sending secret messages. It works like this. One person, let's say the sender, encrypts a message using a key and algorithms. As a result, the person on the other end can decrypt it. Hence, this leads to a much more secure method of message transmission. Sounds good right? Yes, but what does it really have to do with cryptocurrency?

Most cryptos do not involve secret messages of any kind. In fact, it's the opposite. Take Bitcoin for example. Any information involving Bitcoin transactions is public. Hence, there is no need for these hidden messages. So why do we even need cryptography?


It turns out, cryptography isn't just about sending secret messages. It has several other important functions. For example, hashing and digital signatures. Hashing is used by cryptocurrencies to verify the integrity of data. In other words, it takes large amounts of data and represents it as a short number that is very hard to duplicate. Hence, Hashing is great for maintaining the structure of blockchain data which also holds people's account balances. Furthermore, hashing generates complex math puzzles that form the basis of "block mining."

Digital signatures, on the other hand, allow someone to take secret info they own and prove that they own that information. Of course, they do this without giving it away. Cryptocurrencies let users sign monetary transactions with digital signatures. Thus, proving to the network that an account owner agreed to the terms of that transaction. 


Cryptography is a diversified technology and not all cryptocurrency uses the same one. Bitcoin for example users an algorithm called SHA256 to organize their block data, for their block mining algorithm and also to encode transactions. Now, let's take a look at Ethereum. Ethernet uses SHA3 todo the same functions. However, Both Ethereum and Bitcoin uses ECDSA for digital signatures.

Now, perhaps this article ended up creating more questions for you than answering them but that's the point. Ultimately, generating curiosity is what fuels intellect. So, if you want to know even more about cryptography, now's the perfect time to dive in. If you really want to get your hands dirty, here's a fantastic article on the Principles of Modern Cryptography by Dan Boneh and Victor Shoup at Stanford University.