Understand the Security Behind The Bitcoin

Again and again, it is said that the encryption, especially in the way it was implemented in Bitcoin technology, is a major responsible for its proper functioning. In this article, we explain why this is true and how allows us to rely billion dollars in the protocol.

First of all, it is important to understand that the system is basically a decentralized communication network, within which are stored and synchronized at all times thousands of copies of the current "balance of payments", corresponding to all bitcoins transaction history made between any users who already have effectively used a portfolio of application on the network. It is from the permanent and decentralized update of this "balance" that can know, with confidence and without intermediaries, how many bitcoins belong to each portfolio and can be freely downloaded by anyone holding the private key corresponding to it.

or turn a transaction can be understood as a piece of information that is signed by the user, using the corresponding private key to your wallet, sent to the network and then validated and stored in the chain of blocks (blockchain), technical name than previously called, by analogy with traditional systems, "balance of payments".

Put simply, so a transaction is made:

 1. Input (input): the (s) address (es) Public (s) portfolio which the bitcoins are leaving in order to make up the total balance that you want to send the new (s) address (es) Public (s) portfolio.

2. Value: the amount of bitcoins you want to send through this transaction.

3. Output (output): the conditions to spend the funds listed in the input and in most transactions, also informs the (s) address (s) you may spend bitcoins being sent.

Soon, with the Bitcoin essentially a decentralized network for the transactions between a given number of shares to be communicated to other users, the encryption adoption allows secure compliance with the following requirements for a protocol to this work:

1 - Authenticity: You can mathematically determine which parts of the network are communicating, that is, performing a bitcoins transaction with each other, without the practical point of view the risk of data conflict or need for an intermediary agent to assign security and validity of the process. This check can be done automatically via software with the accuracy of a mathematical function.

2 - Privacy: the computational point of view in general, encryption ensures that nobody can read the contents of a message except the recipient. That ensures that, for example, the ability to send and passwords to check the Internet without the intermediates of this process (such as access or service providers) to discover. In the case of Bitcoin, such use involves once communicated to the network to transfer a given amount of bitcoins a public address to another, only the holder of the private key corresponding to the receipt address may move the funds deposited there. It is as if the "message" sent could only be moved again, and then the corresponding bitcoins her expenses, the holder of the original target key.

3 - Integrity: it is necessary to ensure that the original message will arrive unchanged to its final destination. In the case of Bitcoin, this means that any attempt to circumvent the message sent by the original sender (for example, changing the bitcoins receiving address of a transaction previously signed by the original holder of them) may be identified and invalidated by the network.

The public and private key encryption allows a message to be encrypted with a private key and decrypted with a corresponding public key, working as inseparable pairs. In Bitcoin, the digital signature required to report a transaction to the network and thus spend your bitcoins is made from a private key, it being associated with a corresponding public key from which is calculated the public address of your portfolio. It is precisely the use of cryptographic hash that make this simple process in one direction, but very (VERY) hard in reverse. Ie from them is simple check cryptographically integrity and authenticity of information, such as data relating to a bitcoins transaction, but extremely difficult to break them to circumvent the rules of the system, how to spend bitcoins you originally did not have.