Cryptography is an essential part of cryptocurrency that secures transactions in a way that supports the P2P network. It guarantees security in transactions by creating codes that serve as restricted access for both parties involved. Basically, cryptography uses codes to protect user’s privacy, encrypt algorithm and assure safety on the public network.
Modern cryptography does the following;
Encoding a normal text to an indecipherable string of bits
Comprehending the encryption and thereby converting it to its initial state of being readable
The cryptographic algorithm gives the ability to encrypt and decrypt.
Here is a detailed illustration of cryptographic functions,
- Kazim and Nella are the two parties involved in a transaction.
- Kazim sends Nella an encrypted message with his public key
- The message if seen by a third party cannot be comprehended because it is a string of letters and numbers that does not have a meaning
- Nella receives the encrypted message and uses her private key to decode it. This helps her read the text meaningfully.
Like every other contract which means an “agreement between various individuals or entities”, a smart contract is an executed code that includes the terms of agreement between a buyer and a trader on the blockchain technology. The self-executing agreement authorizes digital asset exchange on the decentralised blockchain network, also, the smart contract code enables unconcealed transactions.
Essentially, smart contracts are digital agreements executed by computer programs and as well needed in the development of Decentralised Applications (DApps), Decentralised Finance (DeFi), and every other solution on the Distributed Ledger Technology (DLT).
CRYPTOGRAPHY IN SMART CONTRACTS
Smart contracts are the strings of code that enable cryptography. While cryptography allows two users to encode and decode text, smart contracts are the documented codes that permit these cryptographic operations.
Comparatively, Smart contract authorizes all blockchain applications to encrypt and decrypt algorithms on the P2P network. Therefore, It is mandatory, for DApps, DeFi, etc to interact with smart contracts, this connection is usually built from the developmental stage of any decentralised product .