The History of Cryptography and How/Why Cryptography Secures Blockchains

Where did Cryptography Come From?

Behind Bitcoin’s emergence is cryptography meaning that applied cryptography to secure blockchains is the biggest technical invention in the 21st century. Cryptography only needed continuous marginal improvement for at least over 2500 years to break free from the backwaters of mathematical sciences. Although, the roman emperor, Julius Caesar, is the most historically known cryptographer through leveraging Caesar cipher cryptography for securing communication with roman generals, it was the Greek Father of history, Herodotus, that first documented secret writing in epic stories about the Greek military 500 BC.

• Since both Herodotus and Caesar, cryptography, perhaps behind the scenes, has played a significant power balancing role in history by protecting sensitive sovereign military and even more importantly Internet database information.

• However, the global public first became generally aware of cryptography when Satoshi Nakamoto, in 2009, successfully combined politics, mathematics, computer science, economics and hardware technology to invent the first globally adopted cryptography based Bitcoin blockchain.

With Bitcoin adoption came exponential advancements in blockchain and cryptography technology turning the cryptocurrency market into a 1 trillion US dollar industry, which means cryptography based applications is now considered as a new financial asset class together with commodities, equities, fixed income and foreign exchange.

• What is cryptography?

• However, what is the history behind cryptography?

• Who are some of the important cryptographers?

• What are the significant developments in cryptography in history?

• What are components of blockchain cryptography?

• How is cryptography used in cryptocurrencies, blockchain, Web3, DeFi, NFTs and all other terms we hear about in the news?

• What is the biggest risk and can cryptography bring back privacy in the Internet age?

Herodotus

Defining Cryptography

By concept, cryptography is a technique used to prevent third parties from gaining access to privileged information, which is why cryptography was historically used mostly by militaries to protect information against enemies.

• For example, per Herodotus, the Greek army used cryptography to prevent Persians from intercepting military communication. However, unlike securing military communication, the Bitcoin blockchain leverages cryptography to transparently ensure accurate transaction reconciliation and prevent database manipulation from any type of central party.

• It’s kind of funny how all cryptography needed to generate bestselling Netflix documentaries was to become synonymous with money by creating a decentralized database securely facilitating transactions and storage of a limited supply of bitcoins.

• The main difference from ancient Greece and now is the existence of powerful computers, which are used to decrypt sensitive information that is protected by cryptographic encryption. Important information stored on databases ranging from military and infrastructure data to bank accounts and even private user information are almost always protected by cryptography. The main problem is that much of that information is stored on a centralized platform, which creates a single attack vector for hackers. Imagine, for example, the chaos that would ensue if a bad actor was able to shut down the US PowerGrid or access the US nuclear codes. Blockchain is a tool to decentralize the database to protect against these single point of attack vectors.

In addition to offering protection against hackers, much of private user information is stored for profit purposes by centralized big technology platforms via the Internet, which are corporations that monetize or sell user information to third parties.

• With the internet still experiencing user adoption, more and more power is resting with these big technology platforms, which can be seen in the trillion dollars in market values of Amazon, Google and Apple. These platforms do provide good stuff like iPhones, instant messaging, tele-health, delivery, banking and much more, but the internet is also eroding privacy piece by piece every day and concentrating all that power with a few giant technology platforms is becoming a problem.

Ultimately, I believe people should decide for themselves how private information should be used and blockchain is the best tool for making privacy on the internet private again. By relying on cryptography, user information can still be accessed by firms trying to provide great services without tying that information to a specific user.

Cryptography Now and How Cryptography Improves Over Time

Like Optimization, Calculus and Artificial Intelligence, Cryptography is considered as an applied sub-field of pure mathematics. While pure math is a field studying obscenely abstract shapes, quantities, numbers and spaces, applied math is used as a tool to solve real world problems. Revolutionary technology sparks are often ignited when engineers successfully apply math developed by purists to solve actual problems like harvesting energy from nuclear fission or using Newton’s calculus to evaluate satellite orbits.

Cryptography emerged as a result of securing military communication through Monoalphabetic, Polyalphabetic and Vigenere ciphers, which are all forms of cryptography based on simplistic usages of text, symbol and number to hide messages in plain sight.

• 500 BC, the Greek father of history, Herodotus, describes how the application of simple Stenography and ciphers led to military victories for ancient Greece in battles against Persia.

• One particular example of stenography used by the ancient Greeks, according to Herodotus, is writing on a messenger’s shaved head and then letting the hair grow back before allowing the messenger to deliver the message. If the messenger is captured, the message is kept hidden beneath the hair on the scalp.

The success of secret writings by the Greeks therefore became an area of military research and the field of cryptography is even derived from the Greek word Kryptos, which is a word that describes something hidden and secret.

• After years of marginal improvement of the secret messaging developed by the Greeks, the famous Roman emperor, Julius Caesar, created slightly more advanced monoalphabetic ciphers through writing letters to Roman generals where every character in the message corresponded to a character three steps to the right in the Roman alphabet.

• For example, the letter “A” became “D” and “Z” became “C, which safeguarded communication with generals simply allowing Caesar to send messages in plain sight, which became a huge strategic advantage for the Roman military.

One approach to decode less advanced ciphers was applying frequency analysis, as certain letters appear more frequently in text like “e” and “a’ in English. Even if “a'' is decoded as “d”, the frequency analyst knows that “d” represents “a’ in the cipher because “d” shows up next to certain letters and also appears with the same frequency as “a” would in normal text.

After Caesar, the world continued the marginal improvement in cryptography because on the side of the cryptography coin are cryptanalysts who seek to decode and decipher secret messages.

Frequency analysis as you can see the letter "E" is popular!

Introduction of Key Word Cryptography

Marginal improvement in cryptography is derived from the historical battles between cryptographers to secure information from cryptanalysts, which is the main reason why blockchain technology exists today. As of August 2022, no cryptanalyst has yet successfully hacked the Bitcoin blockchain!

• However, unlike the blockchain ciphers, the deciphering techniques used to crack monoalphabetic and polyalphabetic ciphers improved rapidly in the 17 to 18th century, cryptographers needed to invent new methods to secure important communication from cryptanalysis, which is why the Vigenere Cipher became a popular cryptography method.

16th century cryptographer, Giovan Battista Bellaso, must have foreseen the coming cryptanalytic evolution when designing the first more advanced Vigenere Cipher in the 1550s.

• If you are a history junky, then perhaps the most famous Vigenere cipher was the cipher revealing information about the French man in the Iron Mask; Napoleon's twin maybe?

The Vigenere cipher added complexity to polyalphabetic ciphers by also including mandatory keywords, which were must haves for decoding a Vigenere cipher. Most importantly, these keywords made frequency analysis obsolete, as keywords shuffled the message by changing the number of times “a” or “e” showed up in a specific text.

Although more secure, the problem with Vigenere is that both sender and receiver must commit the keyword to memory, which creates coordination problems and that is why it took 200 to 300 years for cryptographers to actually adopt the Vigenere cipher method.

Vigenere where plaintext is what the message should actually say and the ciphertext is what an intercepting enemy would see

Mathematical Cryptography – Early Beginnings

The history of cryptography is split into the classical era and the modern era. The turning point from classical to modern occurred in 1977 with the introduction of both the RSA algorithm and the public key exchange algorithm. These algorithms were revolutionary by being the first viable cryptographic schemes where security was based on the theory of numbers to enable secure communication between two parties without a shared secret.

Cryptography went from being about securely transporting secret codebooks around the world to being able to have provably secure communication between any two parties without worrying about someone listening in on the key exchange.

• Relative to the 18th and 19th century, more advanced ciphers were required to remain secure against code breakers in the 20th century, which in turn required more memory and sophistication by both messengers and senders.

• Cryptographers therefore marginally started shifting from memory based ciphers to algorithms on computing machines, which is also the kind of cryptography that underpins the trillion dollar blockchain industry today in the 21st century.

The foundation for mathematical cryptography actually started with the 19th century English polymath, Charles Babbage, who became obsessed with the puzzle solving nature of cryptography and cryptanalytic.

• From Babbage’s passion to develop systems that systematically decrypts ciphers, he invented the first technique to break the Vigenere Cipher. Thanks to the cryptographic passion, Babbage also invented the first computing template through the analytical engine. As a computing machine for solving a variety of mathematical problems, the analytical engine included classical computer science terms such as memory and processor to apply software commands like THEN FOR and IF.

The techniques invented by Babbage were used by both the Germans and Americans spanning the World Wars and applied cryptography and as the bombs expanded size, cryptography became an even more important matter of national security.

Although texts, keywords and symbols remain important in both the 20th and 21st centuries, cryptography continuously dove deeper into the realm of probability, statistics and mathematics with improving computers.

The Turing machine used to break German Cryptography by the British in World War 2

Cryptography is Even More Important on the Internet and Blockchain

If the public key and RSA algorithm was the set up for a blockchain Big Bang, the actual explosion occurred when Bitcoin was created by merging the internet with cryptography. Together, the internet and cryptography enable and improve the execution of permissionless trust among a group of untrusting parties via a network of computers.

• The internet facilitates information flow of data on railroads between computers connected through train station miners responsible for verification and storage of transactions, while cryptography protects the information flow against third party manipulation.

• Cryptography is therefore a combination of security tools used for protecting blockchain databases, contracts and transactions against manipulation by hackers, governments and any other centralized third parties. Just like museums use advanced security to protect billion dollar paintings against theft, blockchains leverage cryptography to guarantee billion dollar database integrity. While greater museum security increases protection against theft, too much security limits the user experience.

• Imagine therefore being Head of Security of the Louvre museum in Paris and that your responsibility is protecting the famous multibillion dollar DaVinci painting, Mona Lisa, against thieves or damages, which equals deciding over a large budget for investing in a number of security measures such as installing high fences, new alarms and AI security cameras. Some tools like a high non-transparent fence blocking the view of Mona Lisa or requesting excessive amounts of personal information from customers are strong “nevers”, as excessively limiting user experience will decrease museum profits; I mean why even display Mona Lisa then…

If Visa and Mastercard provides greater user experiences than blockchains for payments, then blockchain adoption will likely fail even if certain properties of blockchain technology are unachievable by centralized players like Visa and Mastercard.

Like museums, blockchains must also balance the type, degree and amount of cryptography to apply for security purposes without hindering or limiting a great user experience.

Hash functions look similar to Vigenere!

Main Objectives and Components of Blockchain Cryptography

As described by the word “blockchain”, the blockchain is an evolving and appending decentralized database where new pieces of data or information individually or in combination leads to the creation of a new block chaining new to old information contained in the previous block. The ever evolving blockchain process in turn requires a type of cryptography that achieves below five objectives in order to remain accurate and immutable to protect against malicious actors:

• Avalanche effect a slight change in the data can result in a significantly different output

• Uniqueness every input has a unique output.

• Deterministic any input will have the same output if passed by the same hash function

• Quickness the output can be generated in a very small amount of time.

• Reverse engineering output cannot generate the input

The main purpose of cryptography is basically validating that all information contained in the new block is accurate and also protecting historical blocks from manipulation by preventing reverse engineering.

• For Bitcoin, cryptography ensures that miners responsible for creating new Bitcoin blocks every 10 minutes and accurately verifies new information receives bitcoin currency as a reward.

The three main components of blockchain cryptography used to achieve Avalanche, Uniqueness, Deterministic, Quickness and Reverse Engineering Resistance are the following:

• Asymmetric-Key Cryptography (AKC): unique public-private key pairs are generated by an encryption algorithm to shield owners of private keys from others. The private key is generally a random number and the public key is calculated by executing an irreversible algorithm so that Web3 users may securely transmit money via unsecure channels without releasing private key information.

• Digital Signature (DS): key use case of above ensuring blockchain validity and that data is verified correctly

• Hash functions (HF): make sure that all participants share the same view of the blockchain by securely linking blockchain blocks together and maintaining the integrity of all data stored inside each block. If the database is altered, the hash-algorithm returns an invalid call through a property called the Avalanche effect so that validators disregard faulty information when updating the blockchain. There is no public or private key for hash functions. Instead, the hash function relies on a cipher to generate a hash value of fixed length from the plaintext, which cannot be crypt analytically reverse engineered from the cipher-text.

HF, AKC, and DS all come in different flavors, which mean blockchain developers can choose from an exponential set of cryptographic combinations to achieve network security.

• For example, in the upcoming Ethereum merge, Ethereum’s blockchain will switch from Proof of Work (PoW) to a Proof of Stake consensus mechanism for agreeing on Ethereum’s network state.

• Although a truly decentralized PoW consensus algorithm is considered more secure, the decentralized PoS approach provides almost the same level of security with the added benefit of being less energy intensive and allowing for faster transaction throughput on the network (read up on PoW vs PoS [1]).

• Another example of specific design choice in cryptography is the kind and amount of user identity that is revealed when sending and receiving cryptocurrencies via the network.

• The Bitcoin blockchain relies on pseudonymous cryptography hiding user identity, but not making users entirely anonymous. However, certain blockchain enthusiasts prefer to be completely anonymous when transacting and are therefore developing anonymous alternatives to Bitcoin like Zcash and Monero.

With the recent ban on Tornado cash in the US, which is a mixing service that Ethereum’s users leveraged to hide identities on the otherwise transparent Ethereum blockchain. If you are wealthy or a public person, it makes sense to hide your transaction, but it also makes sense for criminals. Cryptographic design choices and the type of algorithms used to secure blockchains therefore matter a great deal and we shall see what the future of blockchain technology has in store.

Conclusion

• Starting in 500bc, Herodotus first wrote about simple cryptography called stenography where information was hidden in plain sight.

• After Herodotus, came the Caesar ciphers, which leveraged monoalphabetic ciphers to encrypt messages and protect military information from being intercepted by the enemy.

• Following Caesar ciphers, a bunch of other types of cryptography ciphers including polyalphabetic ciphers were developed to stay ahead of hardworking cryptanalytics charged with the responsibility of breaking the now more and more difficult ciphers.

• When frequency analysis became a commonly used technology to break mono and polyalphabetic cryptography, the Vigenere Cipher became popular among cryptographers because it added keywords that made frequency analysis a much less effective cryptanalytic tool.

• However, even the Vigenere cipher failed the test of time when Charles Babbage came up with computing methods to break the Vigenere Cipher.

• After Charles Babbage, cryptography entered the mathematical realm and as a result public key cryptography was invented in the 1970s, which is what blockchains use today in hash functions, digital signatures and asymmetric key cryptography.

• The problem is that public key cryptography is not quantum resistant so blockchain must now continue to evolve in order to stay ahead of the code, cipher and now blockchain hacking cryptanalysts.

We shall see what the future is for cryptography!