Of Communication and Cryptocurrencies – Varun GS
Cryptology is older than processed cheese, and half as talked-about: why has it suddenly come into the limelight? This piece discusses the significance of two of the latest and most important applications of cryptology, outlining both the technical workings, as well as their sociophilosophical implications. The way an ancient methodology, simple yet secure, has evolved and created some of the most useful creations of our lifetime, is as fascinating as it is beautiful.
Throughout the course of history, mathematics and cryptology have walked hand-in-hand, many a time at its forefront. The NSA’s sophisticated encryptions methods today, evolving from Turing’s brilliant yet rudimentary machine — and how he expertly cracked the Nazi’s Enigma code, effectively winning WWII for the Allies — dating all the way back to the Japanese checkerboard cipher, in the 1500s. However, since the beginning of this decade, cryptology has become increasingly ubiquitous, and usage is steadily, if not exponentially, increasing. Progress is being made in all fields — most notably, by far, in the fields of finance and communication. A mere five years ago, cryptology was boring, mundane, and irrelevant to the layman — but a radical change has come into play.
First, let’s discuss Bitcoin — the world’s first peer-to-peer electronic cash system created on the foundation of cryptography. Bitcoin’s scarcity comes from SHA-256 hashes, which computers must solve in order to collect the “block reward” (currently 12.5 BTC, or $88,000). Money can be printed by a central bank infinitely, atoms can be transmutated into gold — but a bitcoin hash can only be solved using powerful computers and running them for hours, if not days on end. This form of scarcity is mathematically provable, and makes use of Proof of Work (PoW), the work here being the energy used by the computers. To control bank records and funds, all you need to do is be the CEO, or gain access to a powerful position within the bank. To control the bitcoin network, you need access to 51% of bitcoin’s hashing power (equivalent to 3.9 x 10 19 hashes, or the power of 7.8 x 10 17 iPhones).
Ownership of bitcoin is determined by public key cryptography — every public bitcoin address is derived from a private key using ECDSA technology. As complicated as it may seem, it’s very simple — whoever has the “private key” of a bitcoin wallet can access the coins within, and whoever has the “public key” can only send bitcoins to that wallet. You can derive the public key from a private key, but you cannot derive a private key from a public key: the encryption goes only one-way. Unlike most payment systems, bitcoin requires no name, email address, phone number, identity verification, or any information in order to store or send value — the beauty of cryptology makes it such that you only need a private key and a public key to access the entire bitcoin network; you can spend/receive funds infinitely and without limits. In order to verify the authenticity of every transaction, transactions are bundled up into “blocks” which are continually added to a “blockchain”. Computers known as “nodes” worldwide each have a copy of the blockchain, and they can independently verify every transaction that goes through — making it a trustless, equal system, without requiring an authority or third-party to verify anything.
The implications of a cryptographically secure online payment system are vast and mindboggling. Merchants no longer need to worry about fraud, nor do websites need to worry about mediation costs, since mediation is simply not necessary — reversing a cryptocurrency transaction is impossible without the key owner’s approval. Buyers no longer need to provide invasive information such as identity details, and they no longer risk credit card fraud by sending their sensitive data to a sketchy site — by sending a bitcoin payment, unlike PayPal, bank transfers, and the like, they do not reveal an iota of personal information, and remain wholly secure. Bitcoin’s decentralisation makes it such that every party has equal rights on the network, and there is no “owner” who can mutate the blockchain — code is law.
The world is still reeling in the wake of Edward Snowden’s revelations, and the fact that the government spies on our every conversation has been frightening and unavoidable — until, of course, the advent of cryptographically secure communication methods, namely, PGP and OTR messaging. PGP is a secure communications medium which is very similar to bitcoin (in the sense that it, too, uses public key cryptography), but it sends messages instead of stores of value. A PGP user can generate a unique key pair — a public key block, and a private decryption key. The public key block can be shared on a public key base (a variety exist, such as MIT’s PGP Key Server), and using this public key block, encrypted messages can be sent. The resulting block of text (gibberish to the human eye) can only be decoded by the intended recipient — that is, the person who owns the private key to the public key block with which the message was encoded. Not only does PGP facilitate private messaging, but it is also able to authenticate the sender of a message via fingerprints, so you can be sure that the sender of a given message is truly who you think it is. It’s similar to signing a message with a bitcoin address (for example, whilst purchasing bitcoins, you can request a signed message from the seller using an address with X BTC stored in it, allowing you to verify the legitimacy of the claim in a cryptographic fashion).
With PGP, anyone can post messages in plaintext out in the open, via any messaging platform — and yet, no prying eyes (a hacker, a malicious friend, or even the government) will be able to discern the message, since they simply do not have the private key to decode it. This is a revolutionary and much needed step forward in the realm of privacy — gone are the days where every “private” conversation is observed by a higher authority. Cryptology has begun to put the power back where it belongs: with the people, and not a centralised authority. Encryption methods have ushered in a new era of freedom. Bitcoin, where you can send millions of dollars across the world within a matter of seconds, without the use (or abuse) of an authority, and PGP/OTR messaging, where you can communicate and validate messages freely and privately — such breakthroughs have only been made possible through the ever-progressing world of mathematics and cryptology. It is truly a privilege to live during such exciting times: to be able to watch such technologies be created, to watch such technologies improve, change lives, flourish, and make the world a better place.
Published at Sat, 21 Dec 2019 16:34:44 +0000
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