Prof. Pooja Khot.

– Crypto Currency with Ethernet

Cryptocurrency

Cryptocurrency, sometimes called crypto-currency or crypto, is any form of

currency that exists digitally or virtually and uses cryptography to secure
transactions. Cryptocurrencies don't have a central issuing or regulating
authority, instead using a decentralized system to record transactions and issue
new units.
What is cryptocurrency?
• Cryptocurrency is a digital payment system that doesn't rely on banks to
verify transactions.
• It’s a peer-to-peer system that can enable anyone anywhere to send and
receive payments. Instead of being physical money carried around and
exchanged in the real world, cryptocurrency payments exist purely as
digital entries to an online database describing specific transactions.
• When you transfer cryptocurrency funds, the transactions are recorded
in a public ledger. Cryptocurrency is stored in digital wallets.
• Cryptocurrency received its name because it uses encryption to verify
transactions. This means advanced coding is involved in storing and
transmitting cryptocurrency data between wallets and to public ledgers.
The aim of encryption is to provide security and safety.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains
the best known today. Much of the interest in cryptocurrencies is to trade for
profit, with speculators at times driving prices skyward.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

How does cryptocurrency work?

• Cryptocurrencies run on a distributed public ledger called blockchain, a
record of all transactions updated and held by currency holders.
• Units of cryptocurrency are created through a process called mining,
which involves using computer power to solve complicated
mathematical problems that generate coins. Users can also buy the
currencies from brokers, then store and spend them using cryptographic
wallets.
• If you own cryptocurrency, you don’t own anything tangible. What you
own is a key that allows you to move a record or a unit of measure from
one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and
applications of blockchain technology are still emerging in financial terms, and
more uses are expected in the future. Transactions including bonds, stocks, and
other financial assets could eventually be traded using the technology.
Cryptocurrency examples:
There are thousands of cryptocurrencies. Some of the best known include:
Bitcoin:

• Founded in 2009, Bitcoin was the first cryptocurrency and is still the
most commonly traded.
• The currency was developed by Satoshi Nakamoto – widely believed to
be a pseudonym for an individual or group of people whose precise
identity remains unknown.
Ethereum:

• Developed in 2015, Ethereum is a blockchain platform with its own

cryptocurrency, called Ether (ETH) or Ethereum.
• It is the most popular cryptocurrency after Bitcoin.
Litecoin:
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• This currency is most similar to bitcoin but has moved more quickly to
develop new innovations, including faster payments and processes to
allow more transactions.
Ripple:

• Ripple is a distributed ledger system that was founded in 2012.

• Ripple can be used to track different kinds of transactions, not just
cryptocurrency.
• The company behind it has worked with various banks and financial
institutions.
Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to
distinguish them from the original.

History of Cryptocurrencies
Before the creation of Bitcoin, there were quite a few examples of online digital
currencies, but none succeeded in attracting much interest or establishing
themselves in financial markets. Two examples of such currencies are B-Money
and Bit Gold.

2008: Satoshi Nakamoto and Bitcoin

• The internet domain bitcoin.org was registered in August 2008.

It remains the homepage of the world’s most widely used
cryptocurrency.
• On October 31 of the same year, a person or organization using the
name Satoshi Nakamoto published a scientific paper titled Bitcoin: A
Peer-to-Peer Electronic Cash System. This paper is known in the crypto
world as “Satoshi’s whitepaper.”
• The paper presented the concept of cryptographically secured
blockchain technology. Bitcoin was described as a theoretical open-
source digital resource.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• To this day, no one knows who Satoshi Nakamoto is. His identity is
subject to lots of myths and theories. It is possible that his identity will
always remain unknown.
2009: Bitcoin Mining Begins

• In early 2009 the Bitcoin software became available to the public for the
first time.
• Satoshi Nakamoto mined the first 50 Bitcoins, thus launching the
practice of crypto mining.
• It was a time when only a small team of programmers and enthusiasts
participated in the development of what few of them anticipated would
one day be viewed as a groundbreaking technology.

2010: Early Transactions

• It wasn’t realistic to attribute any real value to Bitcoin during its first year
of existence.
• Developer Gavin Andresen bought 10,000 Bitcoins for $50 and created a
website called Bitcoin Faucet where he literally donated Bitcoin for fun.
• The most famous tale from this era concerns Laszlo Hanyecz, a software
developer who bought two pizzas for 10,000 Bitcoins. This is widely
recognized as the very first cryptocurrency transaction. At Bitcoin’s peak
price, those two pizzas would be worth well in excess of $600 million.
But Laszlo never regretted his decision. He believes it was a crucial step
in establishing the growth of the crypto ecosystem.
• In December 2010, Satoshi Nakamoto posted his last public message to
the popular online forum called bitcointalk. He wrote about some minor
details about the latest version of the software. Afterwards, he remained
in touch with some programmers via email, but there is no trace of him
after April 2011.
2011: New Cryptocurrencies Are Born

• On the wing’s of Bitcoin’s success, the idea of decentralized digital

currencies slowly started to gain traction.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• As a result, the first alternative cryptocurrencies began to appear.

Because these currencies were alternatives to the established
cryptocurrency, Bitcoin, they were known as altcoins.
• Most altcoins offer incremental improvements over the original Bitcoin
protocol, features like greater speed, enhanced anonymity, and so on.
• Litecoin was among the first altcoins, which is why it is sometimes
portrayed as the silver to Bitcoin’s gold. There are now thousands of
cryptocurrencies.

2013: The First Big Bubble

• In January 2013, the price of a single Bitcoin exceeded $1,000 for the
first time.
• It was an important milestone, even if the price dropped quickly
afterward and then stagnated for about two years before managing to
hit the $1,000 mark again.
• Some early adopters suffered great losses during the price lull, and it
caused a lot of negative press for Bitcoin. There was a lot of news
coverage, and many people learned about cryptocurrency for the first
time in the context of these lost fortunes.
• The crypto market grew slowly. It wasn’t clear how many of the alt coins
would survive. Many didn’t.
2014: Mt. Gox and Turbulent Times

• The market’s biggest cryptocurrency exchange was a website called Mt.

Gox. In January 2014, it was hacked. The hackers got away with 850,000
 Prof. Pooja Khot. – Crypto Currency with Ethernet

bitcoins. It still isn’t clear who was responsible for what remains the
largest theft in crypto history.
• Critics said that because cryptocurrencies are based on anonymity and
decentralization, it was no wonder it was hacked and that the hackers
were impossible to trace.
• In November 2014, the founder of the Silk Road crypto website was
sentenced to life imprisonment after illegal drugs were found to account
for about 70% of the products sold via his website, which relied on
Bitcoin to make sales to anonymous customers.
2015: Ethereum and the Altcoin Boom

• The Ethereum project was launched in 2015.

• Some people think of it as the first truly useful implementation of the
ideas underlying Bitcoin.
• Ethereum introduced smart contracts, a technology that allows the
blockchain to host software programs in addition to crypto funds. Smart
contracts enabled the development of complex, useful applications in
finance and other areas.

In addition to smart contracts, Ethereum pioneered the notion of hosting

multiple currencies. Although Ethereum had its own cryptocurrency, Ether,
countless new token projects were implemented on top of the Ethereum
blockchain. Smart contracts and custom currencies proved a powerful
combination for ambitious developers and entrepreneurs.
2016: A Flood of ICOs
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• Ethereum’s popularity was marked by the emergence of projects that

acquired start-up funds via crowdfunding – specifically initial coin
offerings in which new tokens are offered to investors much as newly
issued stock is offered to investors when a corporation goes public in an
IPO, or initial public offering.
• People bought the coins as investments or to support the projects the
coins were created to support.
• Some of the ICOs turned out to be poorly conceived. Some were get-rich
schemes. Some were Ponzi schemes masquerading as legitimate
investments. And some laid the groundwork for innovative, useful
products and services.
2017: Bitcoin reaches $20,000

• The number of publicly available trading platforms and exchanges

gradually increased, making it much easier to buy and sell
cryptocurrencies. The explosion of ICOs intensified.
• All of this contributed to the rapid growth of the ecosystem. This young
technology promised huge profits, and the total market capitalization of
cryptocurrencies exceeded $800 billion dollars by the start of 2018. It
seemed like the only thing you needed to put a new company on the
map was to make sure “crypto” or “blockchain” was part of its name.
2018: Back to Reality

• The market’s growth was unsustainable, so in retrospect it seems

inevitable that the bubble burst and prices began a step decline.
• Many projects collapsed as they were poorly conceived or too ambitious.
2019-Present: Solving Real Problems

• Crypto projects that survived the 2018 burst seemed to have something
in common. They address real problems and deliver useful new services
using the power of blockchain technology and cryptocurrencies.
• Investors are now analyzing the business plans of crypto start-ups
instead of simply investing in new cryptocurrencies based on their
usefulness in everyday buying and selling.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• Today’s crypto projects are found in gambling, video games, sports,

identity management, finance, and other industries. With more than a
decade of technical development behind them, today’s crypto experts
are able to find ways to streamline pre-blockchain businesses, offering
new products and services that could not exist without blockchain.
Facing the Future

• The world is increasingly digital and interconnected, and

cryptocurrencies play a key role in delivering financial autonomy to every
person on the planet.
• Bitcoin and other cryptocurrencies represent one possible future of
money, with an emerging consensus that they will radically change the
global financial system.
• There are nearly 2 billion would-be consumers, worldwide, who don’t
have access to banking services. Cryptocurrencies could allow each of
them to participate in the world’s financial life. What they do and say
with this opportunity will change us all forever.

Distributed Ledger Technology (DLT)

A blockchain is a digital ledger of transactions that are distributed across the
entire network of computers (or nodes) on the blockchain. Distributed ledgers
use independent nodes to record, share, and synchronize transactions in their
respective electronic ledgers instead of keeping them in one centralized server.
A blockchain uses several technologies like digital signatures, distributed
networks, and encryption/ decryption methods including distributed ledger
technology to enable blockchain applications.
Blockchain is one of the types of DLT in which transactions are recorded with
an unchangeable cryptographic signature called a hash. That is why distributed
ledgers are often called blockchains.
What is Distributed Ledger Technology (DLT)?
Distributed Ledger Technology (DLT) is centered around an encoded and
distributed database where records regarding transactions are stored. A
 Prof. Pooja Khot. – Crypto Currency with Ethernet

distributed ledger is a database that is spread across various computers, nodes,

institutions, or countries accessible by multiple people around the globe.
Features:
1. Decentralized: It is a decentralized technology and every node will maintain
the ledger, and if any data changes happen, the ledger will get updated. The
process of updating takes place independently at each node. Even small
updates or changes made to the ledger are reflected and the history of that
change is sent to all participants in a matter of seconds.
2. Immutable: Distributed ledger uses cryptography to create a secure
database in which data once stored cannot be altered or changed.
3. Append only: Distributed ledgers are append-only in comparison to the
traditional database where data can be altered.
4. Distributed: In this technology, there is no central server or authority
managing the database, which makes the technology transparent. To
counter the weaknesses of having one ledger to rule all, So that there is no
one authoritative copy and have specific rules around changing them. This
would make the system much more transparent and will make it a more
decentralized authority. In this process, every node or contributor of the
ledger will try to verify the transactions with the various consensus
algorithms or voting. the voting or participation of all the nodes depends on
the rules of that ledger. In the case of bitcoin, the Proof of Work consensus
mechanism is used for the participation of each node.
5. Shared: The distributed ledger is not associated with any single entity. It is
shared among the nodes on the network where some nodes have a full
copy of the ledger while some nodes have only the necessary information
that is required to make them functional and efficient.
6. Smart Contracts: Distributed ledgers can be programmed to execute smart
contracts, which are self-executing contracts with the terms of the
agreement between buyer and seller being directly written into lines of
code. This allows for transactions to be automated, secure, and transparent.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

7. Fault Tolerance: Distributed ledgers are highly fault-tolerant because of

their decentralized nature. If one node or participant fails, the data remains
available on other nodes.
8. Transparency: Distributed ledgers are transparent because every participant
can see the transactions that occur on the ledger. This transparency helps in
creating trust among the participants.
9. Efficiency: The distributed nature of ledgers makes them highly efficient.
Transactions can be processed and settled in a matter of seconds, making
them much faster than traditional methods.
10. Security: Distributed ledgers are highly secure because of their
cryptographic nature. Every transaction is recorded with a cryptographic
signature that ensures that it cannot be altered. This makes the technology
highly secure and resistant to fraud.
Types of Distributed Ledger Technology
The Distributed Ledgers can be categorized into three categories:
1. Permissioned DLT: Nodes have to take permission from a central
authority to access or make any changes in the network. Mostly these
types of permissions include identity verification.
2. Permissionless DLT: There is no central authority to validate
transactions, rather existing nodes are collectively responsible for
validating the transactions. Various consensus mechanisms are used to
validate transactions based on predefined algorithms. In the case of
bitcoin proof of work consensus mechanism is used.
3. Hybrid DLT: It is combined with both permissionless and permissioned
DLTs and can benefit from both of them.

Cryptography
Cryptography is a technique or a set of protocols that secure information from
any third party during a process of communication. It is also made up of two
 Prof. Pooja Khot. – Crypto Currency with Ethernet

Greek terms, Kryptos term meaning “hidden” and Graphein, a term meaning
“to write”. Some terminologies related to Cryptography:
• Encryption: Conversion of normal text to a random sequence of bits.
• Key: Some amount of information is required to get the information of
the cryptographic algorithm.
• Decryption: The inverse process of encryption, conversion of a Random
sequence of bits to plaintext.
• Cipher: The mathematical function, i.e. a cryptographic algorithm which
is used to convert plaintext to ciphertext(Random sequence of bits).
Types of Cryptography
The two types of cryptography are:
• Symmetric-key cryptography.
• Asymmetric-key cryptography.
1. Symmetric-key Encryption: It focuses on a similar key for encryption as well
as decryption. Most importantly, the symmetric key encryption method is also
applicable to secure website connections or encryption of data. It is also
referred to as secret-key cryptography. The only problem is that the sender and
receiver exchange keys in a secure manner. The popular symmetric-key
cryptography system is Data Encryption System(DES). The cryptographic
algorithm utilizes the key in a cipher to encrypt the data and the data must be
accessed. A person entrusted with the secret key can decrypt the data.
Examples: AES, DES, etc.
Features:
• It is also known as Secret key cryptography.
• Both parties have the same key to keeping secrets.
• It is suited for bulk encryptions.
• It requires less computational power and faster transfer.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

2. Asymmetric-key Encryption: This cryptographic method uses different keys

for the encryption and decryption process. This encryption method uses public
and private key methods. This public key method help completely unknown
parties to share information between them like email id. private key helps to
decrypt the messages and it also helps in the verification of the digital
signature. The mathematical relation between the keys is that the private key
cannot be derived from the public key, but the public key can be derived from
the private key. Example: ECC,DSS etc.
Features:
• It is also known as Public-key cryptography.
• It is often used for sharing secret keys of symmetric cryptography.
• It requires a long processing time for execution.
• Plays a significant role in website server authenticity.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

Overview of Hashing
• Hashing in blockchain implies the transformation of input data into a
fixed size output through a specific algorithm.
• It establishes data integrity and averts fraudulent transactions. At the
core of this process are hash functions, which create unique digital
fingerprints for data. The output, known as a hash value, is unique to the
input data, even if the input data is altered slightly, the hash value will be
drastically different.
• This property of hash functions makes them an indispensable
component of various data structures, including blockchain technology,
where each block contains the hash of the previous block.
Different hashing algorithms like SHA-256 for Bitcoin and Scrypt for Litecoin are
available, each boasting unique properties and applications. A good hash
function is essential for maintaining the security and integrity of the
blockchain, as it guarantees that unique hashes are generated for different
inputs, ensuring the authenticity of transactions and preventing tampering.

What is a hash function in a blockchain transaction?

Cryptographic hash functions generate a fixed-length character string from data
records of any length. A data record can be a word, a sentence, a longer text or
an entire file.
• A cryptographic hash function is used for security purposes and
constitutes the backbone of crypto security
• A hash function turns a random input of data (keys) into a string of bytes
with a fixed length and structure (hash value)
• The hash of a transaction makes it easy to identify transactions on the
blockchain

What is a hash function?

The Bitcoin network depends on a set of rules called the Proof of
Work consensus algorithm. This consensus algorithm is a set of rules that
 Prof. Pooja Khot. – Crypto Currency with Ethernet

governs a blockchain network. Outside of cryptocurrencies, the most common

usage of hash functions is in the storage of passwords.
# An example of this would be the size and price of burgers at a restaurant.
• The cost of a burger is determined by its size.
• Therefore, in this case, the cost is a function of the size.
• Let’s say you can buy small, medium and large burgers and their
respective costs are $1.50, $2.50 and $3.50.
• The input is the size of the burger.
• The output is the cost of the burger.

A hash function turns an input (for example text) into a string of bytes with a
fixed length and structure. The output or value created is called a ‘hash value’
or ‘checksum.’ Any hash value created from data using a specific hashing
algorithm is always the same length and one-way - it cannot be reversed.

The purpose of hash functions

Hash functions originated from the need to make content uniform in length on
one hand, and for usage as singularly unique identifiers on the other. Typical
uses for hash functions outside the cryptocurrency sphere include:
• Calculating a (short) checksum for an object, such as the checksum for an
ISBN (International Standard Book Number)
• Identifying any content almost without ambiguity but still “briefly”,
without revealing anything about the content in cryptographic
applications
 Prof. Pooja Khot. – Crypto Currency with Ethernet

Digital signatures
Digital signatures are the public-key primitives of message authentication. In
the physical world, it is common to use handwritten signatures on handwritten
or typed messages. They are used to bind signatory to the message.
Similarly, a digital signature is a technique that binds a person/entity to the
digital data. This binding can be independently verified by receiver as well as
any third party.
Digital signature is a cryptographic value that is calculated from the data and a
secret key known only by the signer.
In real world, the receiver of message needs assurance that the message
belongs to the sender and he should not be able to repudiate the origination of
 Prof. Pooja Khot. – Crypto Currency with Ethernet

that message. This requirement is very crucial in business applications, since

likelihood of a dispute over exchanged data is very high.
Model of Digital Signature
As mentioned earlier, the digital signature scheme is based on public key
cryptography. The model of digital signature scheme is depicted in the
following illustration –

The following points explain the entire process in detail −

• Each person adopting this scheme has a public-private key pair.
• Generally, the key pairs used for encryption/decryption and
signing/verifying are different. The private key used for signing is
referred to as the signature key and the public key as the verification key.
• Signer feeds data to the hash function and generates hash of data.
• Hash value and signature key are then fed to the signature algorithm
which produces the digital signature on given hash. Signature is
appended to the data and then both are sent to the verifier.
• Verifier feeds the digital signature and the verification key into the
verification algorithm. The verification algorithm gives some value as
output.
• Verifier also runs same hash function on received data to generate hash
value.
• For verification, this hash value and output of verification algorithm are
compared. Based on the comparison result, verifier decides whether the
digital signature is valid.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

Since digital signature is created by ‘private’ key of signer and no one

•
else can have this key; the signer cannot repudiate signing the data in
future.
# Importance of Digital Signature
Out of all cryptographic primitives, the digital signature using public key
cryptography is considered as very important and useful tool to achieve
information security.
Apart from ability to provide non-repudiation of message, the digital signature
also provides message authentication and data integrity. Let us briefly see how
this is achieved by the digital signature −
• Message authentication − When the verifier validates the digital signature
using public key of a sender, he is assured that signature has been created
only by sender who possess the corresponding secret private key and no
one else.
• Data Integrity − In case an attacker has access to the data and modifies it,
the digital signature verification at receiver end fails. The hash of modified
data and the output provided by the verification algorithm will not match.
Hence, receiver can safely deny the message assuming that data integrity
has been breached.
• Non-repudiation − Since it is assumed that only the signer has the
knowledge of the signature key, he can only create unique signature on a
given data. Thus the receiver can present data and the digital signature to
a third party as evidence if any dispute arises in the future.
By adding public-key encryption to digital signature scheme, we can create a
cryptosystem that can provide the four essential elements of security namely −
Privacy, Authentication, Integrity, and Non-repudiation.
Encryption with Digital Signature
In many digital communications, it is desirable to exchange an encrypted
messages than plaintext to achieve confidentiality. In public key encryption
scheme, a public (encryption) key of sender is available in open domain, and
 Prof. Pooja Khot. – Crypto Currency with Ethernet

hence anyone can spoof his identity and send any encrypted message to the
receiver.
This makes it essential for users employing PKC for encryption to seek digital
signatures along with encrypted data to be assured of message authentication
and non-repudiation.
This can archived by combining digital signatures with encryption scheme. Let
us briefly discuss how to achieve this requirement. There are two possibilities,
sign-then-encrypt and encrypt-then-sign.
However, the crypto system based on sign-then-encrypt can be exploited by
receiver to spoof identity of sender and sent that data to third party. Hence,
this method is not preferred. The process of encrypt-then-sign is more reliable
and widely adopted. This is depicted in the following illustration −

Encryption
Encryption in cryptography is a process by which plain text or a piece of
information is converted into cipher text or text that can only be decoded by
the receiver for whom the information was intended. The algorithm used for
the encryption process is known as cipher. It helps to protect consumer
information, emails, and other sensitive data from unauthorized access as well
as secures communication networks. Presently there are many options to
choose from and find the most secure algorithm that meets our requirements.
Types of Encryption:
 Prof. Pooja Khot. – Crypto Currency with Ethernet

There are two methods or types through which encryption take place, these
below are two types of encryption:
• Symmetric Key Encryption
• Asymmetric Key Encryption
Features of Encryption:
• Confidentiality: Information can only be accessed by the person for
whom it is intended and no other person except him can access it.
• Integrity: Information cannot be modified in storage or transition
between sender and intended receiver without any addition to
information being detected.
• Non-repudiation: The creator/sender of information cannot deny his
intention to send information at later stage.
• Authentication: The identities of sender and receiver are confirmed. As
well as you can detect the origination of information is confirmed.

Encryption Algorithms
To secure information, you can employ a variety of data encryption algorithms.
The algorithms differ in terms of how accurately they safeguard data as well as
how complex they are. Some of the more popular algorithms that have been in
use over the years are listed below:
1. AES(Advance Encryption Standard)

• Advance Encryption Standard also abbreviated as AES, is a symmetric

block cipher which is chosen by United States government to protect
significant information and is used to encrypt sensitive data of hardware
and software.
• AES has three 128-bit fixed block ciphers of keys having sizes 128, 192
and 256 bits. Key sizes are unlimited but block size is maximum 256 bits.
• The AES design is based on a substitution-permutation network (SPN) and
does not use the Data Encryption Standard (DES) Feistel network.
2. RSA ( Rivest, Shamir and Adleman)
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• RSA is an asymmetric key algorithm which is named after its

creators Rivest, Shamir and Adleman.
• The algorithm is based on the fact that the factors of large composite
number is difficult: when the integers are prime, this method is known as
Prime Factorization.
• It is generator of public key and private key.
• Using public key we convert plain text to cipher text and private key is
used for converting cipher text to plain text. Public key is accessible by
everyone whereas Private Key is kept secret.
• Public Key and Private Key are kept different.Thus making it more secure
algorithm for data security.
3. Triple DES

• Triple DES is a block cipher algorithm that was created to replace its
older version Data Encryption Standard(DES).
• In 1956 it was found out that 56 key-bit of DES was not enough to
prevent brute force attack, so Triple DES was discovered with the
purpose of enlarging the key space without any requirement to change
algorithm.
• It has a key length of 168 bits three 56-bit DES keys but due to meet-in-
middle-attack the effective security is only provided for only 112 bits.
• However Triple DES suffers from slow performance in software. Triple
DES is well suited for hardware implementation. But presently Triple DES
is largely replaced by AES (Advance Encryption Standard).
4. Twofish

• Twofish algorithm is successor of blowfish algorithm.

• It was designed by Bruce Schneier, John Kesley, Dough Whiting, David
Wagner, Chris Hall and Niels Ferguson.
• It uses block ciphering It uses a single key of length 256 bits and is said to
be efficient both for software that runs in smaller processors such as
those in smart cards and for embedding in hardware .
• It allows implementers to trade off encryption speed, key setup time,
and code size to balance performance.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

5. Blowfish

• Blowfish was created to solve the DES algorithm’s problem.

• The algorithm is freely usable by everyone and has been released into
the public domain.
• The technique uses a 64-bit block size, and the length of the key can
range from 32 to 448 bits.
• It is the best permutation technique for cipher-related encryption and
operates on the Feistel structure using a 16-bit round cipher. The
information in the Blowfish algorithm is encrypted and decrypted using a
single key.
Advantages of Encryption
• Data encryption keeps the data isolated from the security of the device
on which it is stored.
• Encryption improves the security of our information.
• When the data is encrypted, it can only decrypt by the person having
key.
Disadvantages of Encryption
• If the password or key is lost, the user will be unable to open the
encrypted file.
• Although data encryption is a useful data security strategy, it requires a
lot of resources, including time, data processing, and the use of many
encryption and decryption techniques.

Elliptic Curve Cryptography

ECC, as the name implies, is an asymmetric encryption algorithm that employs
the algebraic architecture of elliptic curves with finite fields.
• Elliptic Curve Cryptography (ECC) is an encryption technology
comparable to RSA that enables public-key encryption.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• While RSA’s security is dependent on huge prime numbers, ECC

leverages the mathematical theory of elliptic curves to achieve the same
level of security with considerably smaller keys.
• Victor Miller and Neal Koblitz separately proposed elliptic curve ciphers
in the mid-1980s. On a high level, they are analogs of actual public
cryptosystems in which modular arithmetic is substituted by elliptic
curve operations.
History of Elliptic Curve Cryptography
• Neal Koblitz and Victor S. Miller independently proposed the use of
elliptic curves in encryption in 1985.
• Elliptic curve cryptography algorithms entered wide use from 2004 to
2005.
• In the mid-1980s, researchers found that examining elliptic curves could
lead to the discovery of new sources of difficult problems. Elliptic Curve
Cryptography (ECC) introduced a new degree of security to public key
cryptosystems, that provide combined encryption and digital signature
services.
• The security of elliptic curve cryptosystems, like that of all public-key
cryptosystems, is based on tough mathematical issues at the core. Given
two elliptic curve points G and Y, where Y = kG.
• The term “elliptic curve” is derived from the ellipse. Elliptic curves were
discovered in the form of the Diophantine equation for c, after the 17th
century. Furthermore, while calculating the surface of the ellipse is
simple, calculating the circumference of the ellipse is difficult. The
equation can be simplified to an integral:

Components of Elliptic Curve Cryptography

1. ECC keys:
• Private key: ECC cryptography’s private key creation is as simple as
safely producing a random integer in a specific range, making it highly
quick. Any integer in the field represents a valid ECC private key.
 Prof. Pooja Khot. – Crypto Currency with Ethernet

• Public keys: Public keys within ECC are EC points, which are pairs of
integer coordinates x, and y that lie on a curve. Because of its unique
features, EC points can be compressed to a single coordinate + 1 bit (odd
or even). As a result, the compressed public key corresponds to a 256-bit
ECC.
2. Generator Point:
• ECC cryptosystems establish a special pre-defined EC point called
generator point G (base point) for elliptic curves over finite fields, which
can generate any other position in its subgroup over the elliptic curve by
multiplying G from some integer in the range [0…r].
• The number r is referred to as the “ordering” of the cyclic subgroup.
• Elliptic curve subgroups typically contain numerous generator points, but
cryptologists carefully select one of them to generate the entire group
(or subgroup), and is excellent for performance optimizations in
calculations. This is the “G” generator.

# Elliptic Curve Cryptography Algorithms

Based on the arithmetic of elliptic curves over finite fields, Elliptic-Curve
Cryptography (ECC) provides numerous sets of algorithms:

Digital signature algorithms:

• Elliptic Curve Digital Signature Algorithm. (ECDSA): ECDSA, or Elliptic
Curve Digital Signature Algorithm, is a more highly complicated public-
key cryptography encryption algorithm. Elliptic curve cryptography is a
type of public key cryptography that uses the algebraic structure of
elliptic curves with finite fields as its foundation. Elliptic curve
cryptography is primarily used to generate pseudo-random numbers,
digital signatures, and other data.
• Edwards-curve Digital Signature Algorithm (EdDSA): The Edwards-curve
Digital Signature Algorithm (EdDSA) was proposed as a replacement for
the Elliptic Curve Digital Signature Algorithm for performing fast public-
key digital signatures (ECDSA). Its primary benefits for embedded devices
are higher performance and simple, secure implementations. During a
 Prof. Pooja Khot. – Crypto Currency with Ethernet

signature, no branch or lookup operations based on the secret values are

performed. Many side-channel attacks are foiled by these properties.

Encryption algorithms:
• Elliptic Curve Integrated Encryption Scheme (ECIES): ECIES is a public-
key authenticated encryption scheme that uses a KDF (key-derivation
function) to generate a separate Medium Access Control key and
symmetric encryption key from the ECDH shared secret. Because the
ECIES algorithm incorporates a symmetric cipher, it can encrypt any
amount of data. In practice, ECIES is used by standards such as Intelligent
Transportation Systems.
• EC-based ElGamal Elliptic Curve Cryptography: ElGamal Elliptic Curve
Cryptography is the public key cryptography equivalent of ElGamal
encryption schemes that employ the Elliptic Curve Discrete Logarithm
Problem. ElGamal is an asymmetric encryption algorithm that is used to
send messages securely over long distances. Unfortunately, if the
encrypted message is short enough, the algorithm is vulnerable to a
Meet in the Middle attack.

Key Agreement algorithm:

• Elliptic-curve Diffie–Hellman (ECDH): Elliptic-curve Diffie-Hellman
(ECDH) is a key agreement protocol that enables two parties to establish
a shared secret over an insecure channel, each with an elliptic-curve
public-private key pair. This shared secret can be used directly as a key or
to generate another key. Following that, the key, or the derived key, can
be used to encrypt subsequent communications with a symmetric-key
cipher.
• Fully Hashed Menezes-Qu-Vanstone(FHMQV): Fully Hashed Menezes-
Qu-Vanstone is an authenticated key agreement protocol based on the
Diffie-Hellman scheme. MQV, like other authenticated Diffie-Hellman
schemes, protects against an active attacker. The protocol can be
adapted to work in any finite group, most notably elliptic curve groups,
in which it is recognized as elliptic curve MQV (ECMQV).
 Prof. Pooja Khot. – Crypto Currency with Ethernet

Application of Elliptic Curve Cryptography:

• Diffie-Hellman: The basic public-key cryptosystem suggested for secret
key sharing is the Diffie-Hellman protocol. If A (Alice) and B (Bob) initially
agree on a given curve, field size, and mathematical type. They then
distribute the secret key in the following manner. We can see that all we
need to build the Diffie-Hellman protocol is scalar multiplication.
• Elliptic Curve Digital Signature Algorithm (ECDSA): ECC is one of the
most widely utilized digital signature implementation approaches in
cryptocurrencies. In order to sign transactions, both Bitcoin and
Ethereum use the field inverse multiplication, but also arithmetic
multiplication, inverse function, and modular operation.
• Online application: Moreover, ECC is not limited to cryptocurrencies. It is
an encryption standard that will be utilized by most online apps in the
future due to its reduced key size and efficiency. Most commonly used in
cryptocurrencies such as Bitcoin and Ethereum, along with single-way
encryption of emails, data, and software.
• Blockchain application: The cryptocurrency Bitcoin employs elliptic curve
cryptography. Ethereum 2.0 makes heavy use of elliptic curve pairs with
BLS signatures, as stated in the IETF proposed BLS specification, to
cryptographically ensure that a specific Eth2 validator has really verified a
specific transaction.