Know how cryptographic transaction works in simple steps

lets-steemit (42)in #mgsc • 6 years ago

Hello Everyone,

Hope you all are doing well. In the world of cryptocurrency, did you ever think how does crytography work? How the transactions over the cryptographic network are highly secured. Let me try to explain you with this simple explanation. Hope you will like it.

I have drawn this simple diagram.

Let us understand this step by step:

Sender A has its own private and public key
Sender A initiates a transaction to sender B using public key of Receiver B
Now Sender A encrypts the transaction using some hashing algorithm(e.g. SHA256 in case of bitcoin transaction) and its own private key to generate Hash.
This hash and public key of Receiver B is sent over the network in the form of Digital Signature.
As the digital signature contains the public key of Receiver B, transaction stops at Receiver B
Receiver B needs to decrypt the transaction by unlocking the digital signature.
To unlock the digital signature, Receiver B uses its own private key.
Once the transaction is unlocked, Receiver B receives the amount.

I tried my best to note down steps as simple as I can. Here as we are using encryption and decryption techniques, no one is able to tamper with the transaction unless and until he gets access to the private key. So you should not share your private key with anyone as it is meant to be highly confidential.

When you store your crypto coins on any exchange, you don't get access to your private keys. Exchange itself maintains private keys. So if the internal system of exchange has loopholes, there are high chances of hacking. So it is always recommended to store your coins in a wallet where you have control of your private keys.

Hope you like this article and now you are clear of a cryptographic transaction. If so please do follow me on steemit, upvote and comment down below your views.

Best Regards,
@lets-steemit

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