There are different techniques used to keep the online transactions with bitcoins safe, and hashes, functions, digital signatures and nodes are used to secure this network. It is known as cryptography. It is an encryption model used for cryptocurrencies, where you need to use your password to access your wallet and initiate a transaction with system for trading bitcoin through a peer-to-peer transaction model.
Smartphones, computers and government networks are using cryptography to keep their device secured, and you can find the same password-protected system in financial institutions and social media platforms. Before you know the process of cryptography, you need to have an idea about data encryption and decryption.
Once data is encrypted with a password, only the intended recipient can decode this data by entering the password, and it is known as the encryption process. Crypto text is a secret key that is generated from the original plaintext through this encryption process. Decryption is completely opposite to encryption, where ciphertext can return to the original text.
It is important to use a proper encryption process to protect the data from hackers. You need to use such an encryption system to keep your personal and private information safe, especially when you use the internet. Different layers can do encryption, and cryptography is a multi-layer encryption model used for cryptocurrencies.
Bitcoin is encrypted?
No, bitcoin is not encrypted because all transactions made with bitcoins are available in a public ledger, which is open to all. It is a distributed dataset where strangers can communicate over the BTC network. It is not possible to encrypt the BTC network with a password because miners cannot mine such coins and add new blocks to the network if it is protected with a password.
But bitcoin wallets are encrypted with Advanced Encryption Standard. It is the same encryption model used by the National Security Agency to keep their confidential data safe. Thus it adds to the security aspect of Bitcoin.
In the case of bitcoin, Public Key Cryptography is used, and it contains public and private keys. It is a random digit generated by your wallet, and this function is known as the trapdoor function. Private keys are structured with numbers, but they can be very large in size. Once you initiate a transaction with BTC, your private keys will be converted into a binary string, and it is the security key that can keep your transaction safe. If you disclose this key, then you can lose the funds stored in your wallet.
Hardware wallets or custodian wallets are safer options as compared to cold wallets. They can generate private keys through their own encryption process and use open-source or cloud-source software for the same. Apart from that, some online platforms are available that are tested by cryptography experts and the community, and you can generate private keys through these platforms. These platforms are known as RNGs, and you can use such platforms at your own risk because these platforms can be hacked by malware.
SHA 256, or Secure Hashing Algorithm, is the main encryption model used in cryptography for the bitcoin blockchain. Open knowledge can be used to secure a network and device, and bitcoin is using this hashing technology to keep the P2P network safe. If it is shown as less secure, it can be upgraded to keep the transactions with bitcoin safe.
How to invest in Bitcoin?
To invest in bitcoin, you need to choose a secured platform, and you can open your account with zero processing fees on BitIQ.
Your bank account must be linked with the crypto exchange where you are registering yourself for trading. Make sure you check your crypto account’s status before transferring your funds because it will take some time to activate your account after verifying your KYC. Bitcoin is a virtual currency, and you need to store them in a digital wallet. So, you must choose a encrypted and secure wallet, and you can enable two-factor authentication to keep your wallet safe.
Always use anti-malware and anti-virus software in your system to keep your wallet safe, in case you are using hardware or a cold wallet.
This brief discussion on the usefulness of a wallet and its features will help you make the right choice. Remember, it is important to thoroughly research the crypto domain before starting the investment.