1. Hashing Algorithms (Data Integrity)
Hash functions take input data and transform it into a fixed-size unique hash value. These are one-way and are used to ensure the immutability of blockchain transactions.
Some of the most popular hashing algorithms in blockchain are:
SHA-256 (Secure Hash Algorithm 256-bit) – Used in Bitcoin and most blockchain networks to generate unique transaction identifiers.
Keccak-256 – A variant of SHA-3 used in Ethereum for its cryptographic security.
Blake2b – Applied in Zcash and other privacy coins, it is very fast and efficient.
Why It Matters: Hashing provides tamper-proof transactions so that past data cannot be changed without invalidating the blockchain.
2. Asymmetric Encryption (Public & Private Key Cryptography)
Blockchain applies asymmetric cryptography, also known as public-key cryptography, to secure transactions and authenticate users.
Key Algorithms:
Elliptic Curve Digital Signature Algorithm (ECDSA) – Used in Bitcoin and Ethereum for transaction signing and verification.
EdDSA (Edwards Curve Digital Signature Algorithm) – A faster and more secure alternative, used in Monero and Cardano.
RSA (Rivest-Shamir-Adleman) – Though not so common in blockchain, RSA is still used for secure communication protocols.
Why It Matters: Private keys ensure ownership of digital assets, while public keys allow secure identity verification.
3. Digital Signatures (Authentication of Transactions)
Digital signatures confirm the authenticity and integrity of transactions, thus proving they originate from the legitimate users.
Some Popular Digital Signature Schemes
ECDSA (Elliptic Curve Digital Signature Algorithm) – Utilized in Bitcoin, Ethereum, and most blockchains.
Schnorr Signatures – Enhances privacy and efficiency by aggregating multiple signatures into one (adopted in Bitcoin's Taproot upgrade).
Ring Signatures – Used in Monero to provide transaction anonymity.
Why It Matters: Digital signatures prevent fraudulent transactions and protect against unauthorized access.
4. Zero-Knowledge Proofs (Privacy-Preserving Transactions)
Zero-Knowledge Proofs (ZKPs) allow users to prove knowledge of information without revealing the information itself.
Notable ZKP Algorithms:
zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) – Used in Zcash for private transactions.
zk-STARKs (Zero-Knowledge Scalable Transparent Arguments of Knowledge) – Provides faster and more scalable privacy proofs (used in StarkNet).
Why It Matters: ZKPs enhance privacy in blockchain networks by hiding transaction details while ensuring validity.
5. Homomorphic Encryption (Secure Data Processing)
This encryption method allows computation on encrypted data without decrypting it.
Why It Matters: Used in confidential smart contracts and privacy-focused blockchains to perform secure computations.
6. Byzantine Fault Tolerance (BFT) & Consensus Security
Cryptography helps blockchain networks reach agreement even if some nodes act maliciously.
Popular BFT-Based Algorithms:
PBFT: Used in Hyperledger Fabric and Tendermint of the Cosmos blockchain.
DPoS: Used by EOS and Cardano to attain fast energy-efficient consensus.
Why It Matters: BFT-based cryptography stops the attacks, for example, double-spending, Sybil attack.
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