Lampros Tech

Types of Encryption in Blockchain Technology

Encryption in blockchain technology converts plain text data into an unreadable format using mathematical algorithms. Also known as ciphertext, encryptions protect the confidentiality and security of the information on the block.

Consequently, each block on the blockchain encrypts the data through cryptographic functions. The resulting ciphertext gets tagged to the digital ledger.

Further, encryption secures private keys, which enables the signing of transactions and provides access to Web3 accounts. Cryptographic algorithms generate private keys which are accessible solely to the account holder.

Overall, encryption is an essential component of blockchain technology as it helps to ensure the security and privacy of the information stored on the blockchain.

The Need for Encryption In Blockchain Technology

Encryption ensures the confidentiality and security of the data. Upon converting plain text data into unreadable ciphertext, it uses cryptographic keys to decipher them. Encryptions secure transactions, data, and private keys within the digital ledger.

a padlock on a system keypad denoting encryption of text

Moreover, data encryption in DLT ensures that only authorized parties access the information. 

It further protects against hacks, data breaches, and other security threats.

Essentially, there are three types of encryption catering to different requirements.

Different Types Of Encryption In Blockchain Technology

In blockchain technology, there are mainly three types of encryption:

Public Key Cryptography in Blockchain Technology

Public key cryptography is also known as asymmetric cryptography. The encryption mode uses public and private keys to encrypt and decrypt data. Moreover, the public key is available to everyone, while the private key is only accessible to the key pair owner. 

Public Key Cryptography: Working

Public key cryptography in blockchain technology creates digital signatures. These signatures provide proof of ownership, integrity, and non-repudiation. Public Key Cryptography work as follows:

  1. Key Generation: A user generates a pair of keys – a public key and a private key. Thus, the public key is shared with others, while the private key is kept secret.
  2. Encryption: If someone wants to send a message to the user, they use the user’s public key to encrypt the message. Essentially, the user with the corresponding private key can decrypt the message.
  3. Decryption: The user receives the encrypted message and uses their private key to decrypt it. Consequently, only the person with the private key can decode the text and read it.
  4. Digital Signatures: Public key cryptography creates digital signatures. One can create a digital signature by encrypting a message with their private key. Therefore, the original message and the signature register on the chain.

Anyone can randomly access the public key. Public keys help to decrypt the signature and verify the message source.

The Hash Encryption in Blockchain Technology

Hashing is a process that takes input data and creates a fixed-size output value, known as a hash. The hash function used is a one-way function, i.e., it is irreversible to get the original input data. 

Hashing in blockchain technology creates a secure and tamper-proof record of transactions. Each block links together with the previous hash and the current block hash. Eventually making a “chain of blocks” or simply put, blockchain.

The Hashing Mechanism

One cannot tamper with these blocks without detection. Here is how hashing works:

  1. Input Data: A user inputs data into the hashing function. The data can be of any length and can be anything, such as a message, a file, or a password.
  2. Hashing Algorithm: The hashing function uses a specific algorithm to process the input data and generate a fixed-size output value. The output value is unique to the input data, meaning that even a small change in the input data will result in a completely different hash.
  3. Hash Output: The output value is called the hash, a fixed-size string of characters, usually represented as a hexadecimal number. The hash is a compact representation of the input data and helps to verify the integrity of the data.
  4. Verification: The same hashing function is applied to the original input data to verify the integrity of the data. We consider the data as secure when the generated and the original hash match. The dissimilar hashes are an indication of tampered data. We infer that the integrity of the data is loose.
a key on a semi reflective surface depicting a key necessary for encryption

Symmetry Encryption in Blockchain Technology

Symmetric encryption is a type of encryption that uses the same key to encrypt and decrypt data. This means that both the sender and the receiver of a message must have the same key to communicate securely. Although faster and more efficient than asymmetric encryption, it requires a secure way to exchange keys. Symmetric encryption is useful in applications where speed and efficiency are important. Some examples are secure messaging, file encryption, and network security.

Symmetric Encryption: Working

Symmetric encryption is a type of encryption that uses a single secret key to both encrypt and decrypt data. Here’s how it works

  1. Key Generation: The sender generates a secret key, a string of random bits or characters, and shares it with the receiver through a secure channel.
  2. Encryption: The sender uses the secret key to encrypt the message, which transforms into ciphertext. The encryption algorithm depends on the specific symmetric encryption scheme, such as AES or DES.
  3. Transmission: The sender sends the encrypted message to the receiver through a communication channel.
  4. Decryption: The receiver uses the same secret key to decrypt the message to its original format.

Symmetric encryption is convenient in many applications that require secure messaging, file encryption, and network security. However, a limitation of symmetric encryption is the need for a secure key exchange method. If an attacker intercepts the secret key, they can easily decrypt the message. Therefore, secure exchange methods such as Diffie-Hellman key exchange ensure the secrecy and integrity of the key.

padlock on a keypad depicting encryption

Uses of Public Key Encryption, Symmetric Encryption, and Hashing

Encryption in DLT is essential and is useful in

  1. Secure Transactions: Asymmetric cryptography caters to securing transactions. Transaction security occurs by providing authentication, confidentiality, and integrity. Each participant in a blockchain network has a unique public-private key pair, which they use to sign and verify transactions. Asymmetric cryptography ensures that transaction initiation is by authorized personnel only. The data transmitted between parties remain confidential and tamper-proof.
  2. Digital Signatures: Public key cryptography creates digital signatures, which provide proof of ownership, integrity, and non-repudiation. Each transaction in a blockchain network gets signed with the sender’s private key. Anyone can verify the transaction’s authenticity using the sender’s public key.
  3. Tamper-Proof Records: Hashing helps to create a secure and tamper-proof record of transactions. Each block in the blockchain contains a hash of the previous block, which creates a chain of blocks. Data changes within the block cannot happen without detection. And an attempt to modify data in the chain will change the block’s hash. A hash change is noticeable to other participants in the network.
  4. Consensus Mechanism: Hashing helps to maintain consensus in blockchain network. Nodes in the network use hashing to solve complex mathematical problems to validate transactions and add new blocks to the chain. Further, this ensures that all participants in the network reach a consensus on the validity of transactions and the state of the ledger.
  5. Secure Messaging: Symmetric encryption aptly secures messaging applications such as email and instant messaging. The encryption ensures that only the sender and intended recipient can read the message, protecting it from eavesdropping and unauthorized access.
  6. File Encryption: Symmetric encryption aids in encrypting files, such as sensitive documents, images, and videos, to prevent unauthorized access. A secret key helps in accessing encrypted files. The secret key is known only to the authorized user.

DID YOU KNOW? Symmetric encryptions are strong enough to secure communication networks between devices and routers.

Lastly, your web3 data is safe when your blockchain opts for symmetric encryption. The encryption ensures protection of the network traffic from eavesdropping and unauthorized access, preventing network attacks such as packet sniffing and man-in-the-middle attacks.


Basically, public key cryptography and hashing are essential components of digital ledger technology, providing security, integrity, and consensus in a decentralized environment. 

Meanwhile, Symmetric encryption employs itself to secure data in applications, including messaging, file encryption, and network security, by ensuring the confidentiality and integrity of sensitive information.

Another way to secure the blockchain network is by maintaining consensus throughout the network. know more about the PoW, PoS, DPoS, and the PoH consensus mechanisms!