Encryption

Encryption is the process of converting readable data (plaintext) into an unreadable scrambled form (ciphertext) using a cryptographic algorithm and a key. Only someone with the correct key can decrypt it back to the original.

Types of encryption

Symmetric encryption

The same key encrypts and decrypts the data. Fast and efficient for large amounts of data.

• Examples: AES-256 (used in wallet file encryption)

Asymmetric encryption (public-key)

Uses a key pair — a public key to encrypt and a private key to decrypt (or vice versa for signatures).

• Examples: RSA, ECC (used in TLS, cryptocurrency wallets)

Encryption in cryptocurrency

• Wallet file encryption — most software wallets encrypt the stored private key with a password. Losing the password means losing access (the key is still there, but encrypted)
• TLS/SSL — all connections to exchanges, pools, and wallets use encryption to protect data in transit (you see this as https:// and stratum+ssl://)
• Encrypted messages — some crypto apps offer end-to-end encrypted messaging

Encryption ≠ anonymity

Encrypting a transaction does not make it anonymous. On Bitcoin, all transactions are public — the amounts and addresses are visible to everyone. Encryption protects data in transit or at rest, not the blockchain's public record.

See also

• Decryption
• Cryptography
• Private key
• SSL