There is no doubt the crypto world getting bigger day by day. Although, we know that it is digital world so first thing is to make the asset secure so that no one can access to your assets in any way. So, the idea of digital wallet arises which using the idea of encryption and decryption which makes your assets more secure. Only you are the sole person who can access to your digital asset. In this Topic, we will talk about how encryption and decryption work to protect cryptocurrency wallets and why it is important of their implementation in digital world.
Mechanism of Cryptocurrency Wallets:
Before we discuss this in more comprehensive way lets know the main facts of digital wallets of cryptocurrency. A cryptocurrency wallet is a digital tool or program that allows you to manage, store, and interact with your digital assets, like Bitcoin, Ethereum, and several others. These wallets contain two major components which are the public key and the private key.
What is Public Key? It works like bank account number which is also public. Other people can send you digital asset using your public key.
What is Private Key? On the other hand, Private key is work like security pin or password of your bank account which only you know. You can access your digital assets using your private key.
The Role of Encryption
The process of encryption is used to make secure of your private key from unauthorized access. When you create a cryptocurrency wallet for your digital asset, your private key is encrypted using cryptographic algorithms which is advanced way of security. Let’s discuss how encryption works.
Generation of private key: The private key is the sequence of long random characters. It is upto the wallet to generate your unique private key.
Encryption: Encryption is actually used to convert your private key into a secret code to prevent it from unauthorized access. Symmetric encryption algorithm is used to encrypt the private key for security enhancement of your wallet. A symmetric encryption algorithm uses a same key for both encryption and decryption. This private key is derived from the wallet's password, which is set during the creation of wallet.
Storing Securely Private key: After all that, your private key is stored in your wallet application which you can access any time using your wallet password and without wallet password nobody can access your private key.
The Role of Decryption
Decryption is the opposite of encryption. It is the process through which the encrypted private key is converted back into its original form, which is human-readable. These steps below defines how decryption works…
Authentication: To perform any transaction and access own wallet we need to enter our password. We need to enter the password so that wallet can authenticate that we are the rightful owner of this wallet or not.
Decryption: Once the process of authentication clears then the wallet uses our password to derive the decrypted key, which is then used to decrypt our private key.
Wallet Operations: With the help of decrypted private key, we will be able to sign transaction and receive our cryptocurrency into our wallets.
Report of Blockchain wallets till 2022:
It is obvious that we all need security of our digital assets that’s why the mechanism encryption and decryption act like the guardians of your cryptocurrency wallets. Encryption protects our private key from unauthorized access which is done it by converting it into an unreadable code, while decryption allows us get access to our private key in its original form when needed. After understanding the mechanism of encryption and decryption, you can take important steps to ensure the safety of your digital assets. It is highly recommended to use strong, unique passwords and keep them in a secure place where no one can access it easily.
Disclaimer: This topic is self written and i studied this topic of "encryption and decryption" in my university. I decided to write it as "How the mechanism of encryption and decryption work in crypto wallets." after doing some research.