ENHANCED SECURITYAdvanced
Cryptography

Cryptography is at the core of Earn’s blockchain based technology, providing an immutable source of truth by making your securities issuance and funding processes tamper resistant and more reliable.

Earn’s blockchain based technology makes use of two types of cryptographic algorithms to ensure the authenticity of your financial instruments, asymmetric-key algorithms, and hash functions.

https://earn.re/wp-content/uploads/2021/09/advanced_01.png

Cryptographic hash functions provide the following benefits when publishing financial instruments to the blockchain using Earn.re:

  • 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 always have the same output if passed through the hash function.
  • Quickness – The output can be generated in a very small amount of time.
  • Reverse engineering is not possible, i.e. you cannot generate the input by having the output and the hash function.

 

Hash functions have a major role in linking the blocks to one another and also to maintain the integrity of the data stored inside each block. Any alteration in the block data can lead to inconsistency, making the data invalid.

According to this, if there is even a slight change in the input to the hash function, the output will be totally unrelated as compared to the original.

An example of an SHA-256 hash function is below. Let’s compare the outputs.
Original input
Jack owes Jill $256.53
Output
5cea687abcda5251defa1f0174edcfb49d2f96387e714116183da30a929cf2ad
Original input
Jack owes jill $256.53
Output
5eb36387d21e8919ef22ba78487422a83aeb58950a083f7be1f2d4dcb927fce2

You’ll notice a major difference in output after altering a single character upon input from uppercase to lowercase. This process ensures that your data is reliable and secure on the blockchain; any changes in the block data will lead to a difference in hash value and make the altered input invalid, providing you and your stakeholders with an immutable source of truth.

Asymmetric-key cryptography is where the private key generally needs to be produced by a random number algorithm, and the public key is calculated by executing an irreversible algorithm. The asymmetric encryption algorithm has the advantage of having separate public and private keys, which can be transferred over unsecured channels.

One of the major components of asymmetric-key cryptography is digital signatures. Digital signatures provide integrity to the process; they are easily verifiable and cannot be corrupted.

They also hold the quality of non-repudiation, making them similar to the signatures in the real-world. The digital signatures ensure that the blockchain is valid and the data is verified and correct.

Hashing, public-private key pairs, and the digital signatures together constitute the foundation for the blockchain. These cryptographic features make it possible for blocks to get securely linked by other blocks, and also ensure the reliability and immutability of the data stored on the blockchain.