What is Cryptography?

Jun 4, 2025 | 4 min read

Definition of Cryptography

Cryptography is the science of encrypting and protecting information so that only the intended parties can access it. The information is encrypted or hidden so that only people with the correct key can access it. In a world where more and more of our lives take place online, securing data is becoming increasingly important—making cryptography a vital part of online communication.

The term cryptography comes from the Greek language: kryptós (hidden) and graphein (to write). The word literally means "hidden writing," but today we see cryptography as a method for securely transmitting information. Cryptography works based on encryption: It encrypts and decrypts data.

In cryptocurrency, "crypto" refers to cryptography, where transactions are executed securely and without an intermediary (“trustless”). Additionally, cryptography is used daily when sending and receiving messages on WhatsApp (end-to-end encryption), logging into banks, or securing emails.

Key Takeaways

Cryptography is the science of encrypting and protecting information so that only authorized parties can access it.
It forms the foundation of cryptocurrencies, enabling secure, trustless transactions through public and private keys, blockchain, and hashing.
There are three main types: symmetric encryption, asymmetric encryption, and hash functions.
Cryptography ensures confidentiality, authentication, data integrity, and non-repudiation.
It is not only used for transactions but also for wallets, networks, smart contracts, and digital identity verification.

Where Does Cryptography Come From?

Cryptography is anything but new. Thousands of years ago, people were already using cryptographic techniques to keep information hidden from others. For instance, it was used by the ancient Egyptians. Hieroglyphs and other symbols were used to make religious texts unreadable to outsiders. Later, Julius Caesar employed his famous Caesar cipher, which involved shifting letters in sentences.

In the Middle Ages and later during wars, cryptography became increasingly important. Kings, generals, and spies used secret codes to communicate their strategies and plan their best attacks without the enemy knowing. In World War II, cryptography was taken to a new level. Germany, for example, used the Enigma machine, which completely transformed the alphabet into other letters. Eventually, the Enigma code was cracked by the British mathematician Alan Turing, allowing the Allies to decipher Germany's encrypted messages.

Modern cryptography is far more advanced than in the past. The rise of computers and the internet demands digital security, so complex mathematical algorithms and computer technologies ensure that sensitive data remains protected.

What Role Does Cryptography Play in Cryptocurrencies?

The term "crypto" in cryptocurrency is derived from cryptography. The very first cryptocurrency, Bitcoin, is entirely based on cryptography. The idea behind Bitcoin was introduced in 2008 in a white paper written by a pseudonymous person or group named Satoshi Nakamoto.

A major problem that Satoshi Nakamoto solved was the "double spending problem," where someone could theoretically spend the same amount multiple times. Cryptography prevents this through asymmetric encryption, blockchain, and hashing:

Asymmetric encryption (public and private keys): Every crypto wallet has a private key and a corresponding public key. The public key can be shared to receive crypto, while the private key is used to access it. The private key cannot be derived from the public key thanks to cryptography.
Blockchain and hashing: Every cryptocurrency transaction is recorded in a public and immutable ledger—the blockchain. The name says it all: it is a chain of blocks (with information), in which all transactions are stored. Each new block is verified by the network and linked with a unique hash. This ensures that blocks cannot be easily altered, making cryptocurrencies secure.

By using cryptography, transactions of cryptocurrencies like Bitcoin and Ethereum can take place trustlessly—that is, without a trusted intermediary approving the transaction.

What Types of Cryptography Are There?

Cryptography comes in various forms with different levels of security, mainly differing in the number of cryptographic keys used. The most important types are symmetric cryptography, asymmetric cryptography, and hash functions.

Symmetric Cryptography

Symmetric cryptography uses a symmetric key and is the simplest form of encryption. In symmetric encryption, both the sender and receiver use the same secret key to encode and decode a message or information. Algorithms that use this include the (now outdated) Data Encryption Standard (DES) and the more modern Advanced Encryption Standard (AES). Symmetric encryption is efficient and fast but can have drawbacks. The secret key must not be intercepted before it reaches the recipient; otherwise, the message can be decrypted.

Asymmetric Cryptography

A more secure variant is asymmetric cryptography (also known as public-key cryptography), where each user in a network uses asymmetric keys: a public key and a private key. It works like this: Someone wants to send information and secures it with the recipient's public key. The recipient can use their private key to decrypt the message. If the message is intercepted along the way, the interceptor cannot read it because they do not have the private key.

Hash Functions

The last type of cryptography we’ll discuss is hash functions, which do not use keys at all. Hashing transforms data into a unique fixed-length string (the hash value). In practice, the hash value is unique for each input (although collisions can theoretically occur) and cannot be reversed to the original text. Hash functions can be used, for example, to verify passwords or files without storing the actual content.

Why Is Cryptography So Important?

Cryptography is essential for digital security—not just for cryptocurrencies but for the entire digital world. Without cryptography, confidential data could easily be intercepted and misused. For crypto, this would mean that secure wallets and secure blockchain transactions would not be possible.

These are the four main properties of cryptography:

Confidentiality: Information can only be read by the intended recipient with the secret key.
Authentication: Cryptography allows users to be verified as who they claim to be.
Data Integrity: Information sent via cryptography cannot be altered unnoticed.
Non-repudiation: Transactions signed with a private key cannot be denied later, which prevents fraud and increases network reliability.

In addition to securing transactions, cryptography is used in other parts of the crypto world, for example:

When creating and using a crypto wallet.
For communication between nodes in a network.
For smart contracts on platforms like Ethereum.
For verifying digital identities or ownership rights, such as NFTs.

Final thoughts

Cryptography is a fundamental technology in the digital world that ensures the safety and reliability of our data. From ancient secret codes to the advanced algorithms behind cryptocurrencies, it enables us to protect information from unauthorized access and build trust without intermediaries. Thanks to cryptography, cryptocurrencies can carry out secure, transparent, and immutable transactions. Moreover, cryptography plays a crucial role in various applications such as digital communication, digital identity, and smart contracts, making it indispensable today.