What is cryptography?

How can a network check that you’ve approved a transaction without you handing over your secret key?

That’s where cryptography comes in. Think of an envelope with a lock and a security seal: the lock protects the contents from prying eyes, while the seal helps us spot whether someone has tampered with it. In the digital world these are separate functions, implemented with mathematical algorithms.

Encryption turns readable data into a form that can’t be read without the right key. But cryptography isn’t limited to encryption. It also includes tools for checking where a piece of information came from and whether it has been changed.

How it’s used in crypto

When you send crypto from a wallet you control, the private key is used to create a digital signature. The network can check this signature with the corresponding public key, without learning the private one. The signature is tied to the specific data of the transaction: if that data changes, it doesn’t pass the same check.

Another tool is the hash function. It produces a digital “fingerprint” of the data. A change in the data will, as a rule, produce a different fingerprint. On a blockchain, hashes help link blocks together and detect tampering. They aren’t a form of encryption that you can reverse with a key.

Why it matters

Thanks to these tools, participants can verify transactions without knowing each other personally. Cryptography works together with the network’s rules and the consensus mechanism, not on its own.

We consider one distinction crucial: security doesn’t automatically mean privacy. On public blockchains, such as Bitcoin’s, transactions are visible, even though they use cryptography.

What to watch out for

A strong algorithm won’t protect you if you hand your private key or seed phrase (recovery phrase) to a scammer. Nor does it stop a harmful transaction that you sign yourself. A signature proves approval with the corresponding key, not that the transaction is in your interest or that the recipient can be trusted.