Bitcoin is not ‘crypto’ – CoinGeek

It’s time for another myth-dashing. When somebody mentions the now-passe crypto industry, what is the first thing that comes to your mind? Was it Bitcoin? Well, if it was, you have nothing to be ashamed of. That is what most people will say. But would it surprise you that there isn’t any basis for this word being used in conjunction with Bitcoin?

That’s right. There is no crypto in Bitcoin.

When people use the word crypto, they are just using the short form for cryptography, which is the use of tools and codes to create messages that can only be read by the intended recipient. They use this word synonymous with encryption, which is often (incorrectly) quoted as one of the reasons why Bitcoin is secure and immutable.

Sadly, this is far from reality, and the reasons for this would weave a rich tapestry of history.

Let’s first go over the main false reasons why the word encryption and crypto became associated with Bitcoin. First, the word encryption or cryptography doesn’t appear anywhere in the Bitcoin white paper. “Cryptographic proofs” are mentioned in the white paper, and the difference between these and cryptography is significant.

Cryptography, again, is the general use of codes to ensure that a message is only readable by the intended recipient. In other words, used to pass secret messages around on a public channel. This word is commonly used synonymously with encryption/decryption of messages. It is concerned with sending and receiving secret messages.

Cryptographic proof, however, is the act of using cryptographic primitive functions in order to generate irrefutable public proof that a specific sender sent a message. The message itself is public, and the identity of the sender of the message is verified.

In a way, one is the opposite of the other. While one concerns itself with keeping secret messages, the other concerns itself with the public attestation of messages.

However, because the terms share the same root prefix of “crypto,” the term, which may have initially been incorrectly used, somehow stuck. Rest assured, there is no encryption in Bitcoin. Nothing is encrypted, and there are no secrets. In fact, its security model depends on full transparency in all transactions¹ rather than keeping secrets.

The white paper was first published on the cryptography mailing list.

This is another possible source of the mis-association because the original Bitcoin White Paper was put into this forum, where the participants included many forefront experts in the field of cryptography. The assumption was that Bitcoin must have been a continuation of previous attempts at electronic cash projects (such as David Chaum’s ecash), which did use encryption as part of their system.

Public and Private keys are used

Asymmetric public key cryptography is another possible reason. ECDSA, which stands for Elliptic Curve Digital Signature Algorithm, uses the same mathematical primitives as ECC (elliptic curve cryptography) and, as such, also uses an asymmetric key pair of public and private keys. This is synonymous with other cryptography algorithms which use a public key to encrypt messages and a private key to decrypt them.

However, these keys are not used to encrypt or decrypt anything. They are used to verify publicly that the signer of a transaction moving a coin is the correct person, as specified by the previous sender. In other words, if Alice sent a coin to Bob, then Bitcoin uses ECDSA to ensure that when Bob further signs and sends the coin to Charlie, that Bob is indeed the only one able to create this signature. This prevents someone else from spending Bob’s coins, and it also ensures that whoever Bob sends the coins to can only be moved by that recipient.

Indeed, locking coins to a specific public key to which the owner of the associated private key can be the sole controller is just one of the many ways a coin can be locked. It is certainly not mandatory. Coins can be locked to multiple keys, making it effectively a shared account, or even locked to something not key-related at all, instead locking the coins to a certain locking script². All of these are fancy Bitcoin applications that have only recently begun to be explored³.

So, why, then, if there is no mention of crypto or encryption in the white paper, no use of cryptography, or encryption in the protocol, do many people believe that Bitcoin is secured by encryption? Or why is Bitcoin called a crypto-currency?

Well, the term crypto-currency predates Bitcoin. In fact, as mentioned, previous attempts at electronic cash were called crypto-currencies, and they indeed featured encryption as a way to hide the amounts being sent as a form of privacy protection. This name just sort of stuck around because Bitcoin seemed like just ‘another of the bunch.’

The other, more nefarious reason is that many of the Bitcoin ‘OGs’ have a lot riding on Bitcoin and its price appreciation, and they realize that having Bitcoin associated with encryption and cryptography is a way to make it seem that it can be used to hide your transactions away from prying eyes or government scrutiny. After all, if newcomer ‘whales’ with heaps of illegitimate funds knew that every transaction that they ever make would be forever recorded and scrutable by authorities, they would very likely not be interested in using Bitcoin, instead preferring the tried and true method of shadow banks, money mules, and Rolex dealers. So there is an incentive for those who know better to keep tight-lipped if opening it means threatening price depreciation of your retirement slush fund. If you know any self-proclaimed OGs, ask them where the encryption is in Bitcoin and see what they say.

Bitcoin is a transparent system with a security model based on transparency. Because nodes (miners) are public, and they rely on their blocks being accepted by their competitors, keeping honest is the economic ‘best move’. When everything that you do needs to be confirmed by your peers, lest they reject your blocks, wasting your work, nodes tend to act honestly and according to the rules. Any and all rules can be enforced using this model. Importantly, this model does not rely on keeping any secrets at all.

So next time you talk to a Bitcoin supporter, who calls it ‘crypto,’ tell them there is no encryption or secrets at all in Bitcoin, and that is exactly what makes it work, where all other previous attempts at electronic cash failed.

Jerry Chan
Wall Street Technologist

NOTES:
[1] This is how miners can detect when another node is being dishonest and can vote to ignore their proof of work and reject their blocks. The threat of peer boycott of mining node blocks is what keeps all the mining nodes in line. Not social consensus or even developers.
[2] Bitcoin contains an internal script language, a derivative of FORTH, which can be used to program custom locking scripts in order to program the spendability of coins.
[3] Mostly by projects in BSV blockchain such as STAS and SCrypt

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