What is Cryptography

Cryptography is the practice and study of the secure communication of messages in the presence of malicious third parties who aim to eavesdrop or manipulate these messages. A cipher (i.e., keys) is basically a pair of algorithms that allows the encryption of a message by the sender, and decryption of the message by the receiver.


Modern cryptography is an intersection of mathematics, computer science, electrical engineering, and communication science.  The future of cryptography will include quantum physics due to the advent of quantum computing.


There are three main types of cryptographic encryption techniques are (i) hash functions, (ii) symmetric cryptography, and (iii) asymmetric cryptography. A digital signature is also used in cryptography to verify the identity of the sender of the message and is implemented via a combination of both the hash function and asymmetric cryptography technique



A single encryption key (i.e., cypher) is used to encrypt or decrypt a message between two communicating parties.  This method is the oldest and most common form of secure messaging.  However, it requires the two communicating parties to agree on a cypher.  This is difficult to do so in modern communications where messages are transmitted over a network of many untrusted actors or nodes (i.e., Internet).


Two encryption keys are introduced, a private key and a public key.  The private key is only known to the owner and must be kept private whereas the public key can be given to anyone. The message can be encrypted using the public key by any sender, but the message can only be decrypted by the private key of the receiver. 


Digital signatures on a message are created by combining the sender’s private key with the hash of the message.  Anyone can verify the validity of the signature using the corresponding public key.  Asymmetric cryptography is used in the security of communication in untrusted networks such as the Internet. 


Asymmetric cryptography resolves the coordination problem in symmetric cryptography where the same key must be used by both the sender and receiver of the message.

 Common asymmetric cryptography algorithms are RSA (Rivest-Shamir-Adleman) and ECC (Elliptic-Curve Cryptography) that are commonly used in OTP security tokens and Bitcoin, respectively.

An Honorary Senior Fellow at the University of Queensland with professional experience as a quantitative researcher for BlackRock and Bank of America Merrill Lynch in New York, USA. He led research teams in the development of capital models, securitized products and factor models in both equities and fixed income asset classes. Rand has several academic publications in cryptocurrency, portfolio management, systemic risk & quantitative trading


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