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Lecture on Asymmetric Cryptography in Bitcoin, Blockchain, and Cryptoassets by the Center for Innovative Finance at the University of Basel

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Are you interested in learning about asymmetric cryptography in Bitcoin, blockchain, and cryptoassets? The Center for Innovative Finance at the University of Basel has a captivating lecture on this topic that you won’t want to miss. In this informative lecture, they discuss the concept of asymmetric cryptography, which involves the use of a public and private key for secure encryption and decryption. They explain the math behind establishing the key, the requirements for secure encryption, and the key exchange process involving Alice and Bob. Additionally, they touch on the drawbacks of symmetric encryption and explore examples using the Extended Euclidean Algorithm. If you’re looking to dive deeper into the world of cryptography, this lecture is a great starting point!

Symmetric cryptography has its limitations when it comes to exchanging keys on unsecure networks. To address this, the Center for Innovative Finance at the University of Basel introduces asymmetric cryptography, also known as public key crypto. In their captivating lecture, they explain the concept of establishing a common key on potentially compromised channels. They dive into the math and step-by-step process behind key exchange, using examples and simple numbers to illustrate the principles. If you’re interested in understanding how asymmetric cryptography works and its applications in the world of Bitcoin, blockchain, and cryptoassets, make sure to check out this engaging lecture!

Lecture on Asymmetric Cryptography in Bitcoin, Blockchain, and Cryptoassets by the Center for Innovative Finance at the University of Basel

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Welcome to the world of asymmetric cryptography! In this article, we will explore the fascinating concept of using mathematical algorithms to securely exchange keys for encryption. Unlike traditional symmetric cryptography, which relies on a shared secret key, asymmetric cryptography provides a solution for secure key exchange over compromised channels. We will delve into the mathematics behind establishing the key, understand the key exchange process in detail, and explore the limitations of symmetric encryption. Finally, we will introduce RSA, a popular algorithm for asymmetric encryption, and explore how it can be used to encrypt and decrypt messages. So let’s dive in and unravel the secrets of asymmetric cryptography!

Asymmetric Cryptography: A Solution for Secure Key Exchange

Diffie-Hellman and Merkel’s Solution from 1976

Asymmetric cryptography, also known as public key cryptography, emerged as a breakthrough in the 1970s. It solved the problem of securely exchanging keys over insecure communication channels. One of the earliest and most widely recognized solutions was proposed by Whitfield Diffie, Martin Hellman, and Ralph Merkle in 1976. Their solution incorporated a key exchange protocol, now famously known as the Diffie-Hellman key exchange protocol, which enabled two parties to establish a shared secret key without ever directly transmitting it.

Key Exchange on Compromised Channels

One of the significant advantages of asymmetric cryptography is its ability to facilitate secure key exchange even on compromised communication channels. In traditional symmetric cryptography, if a shared key is intercepted, it compromises the security of all messages encrypted with that key. However, in asymmetric cryptography, even if an attacker intercepts the public keys used for encryption, they cannot easily derive the private key required for decryption. This makes asymmetric cryptography a powerful tool for securing communication in various scenarios.

Understanding Public Key Cryptography

Public and Private Keys

At the heart of asymmetric cryptography are two distinct keys: the public key and the private key. The public key is made freely available to anyone who wishes to communicate with the owner of the key. On the other hand, the private key is kept secret and known only to the owner. This key pair forms the foundation for secure communication using asymmetric cryptography.

Non-sharing of Private Key

The security of asymmetric cryptography relies on the non-sharing of private keys. By keeping the private key secret, only the intended recipient can decrypt messages encrypted with their corresponding public key. This ensures that only the intended recipient can access the information, even if the communication channel is compromised.

Mathematics Behind Establishing the Key

Defining a One-Way Function

To establish a secure key in asymmetric cryptography, we rely on the concept of a one-way function. A one-way function is a mathematical operation that is easy to perform in one direction but computationally infeasible to reverse. In the context of asymmetric cryptography, this property is crucial for the security of the key exchange process.

Parameters for Secure Encryption

To ensure the security of the key exchange, several parameters are carefully chosen. These include the choice of large prime numbers, generator fields, and suitable mathematical operations. The selection of these parameters is based on cryptographic principles that have been extensively studied and validated by experts in the field.

Using Large Prime Numbers

Large prime numbers play a vital role in the security of asymmetric cryptography. The difficulty of factoring large prime numbers into their prime factors makes it computationally infeasible for an attacker to derive the private key from the public key. This reliance on prime factorization forms the foundation for many asymmetric encryption algorithms.

Generator Field

In addition to choosing large prime numbers, the concept of a generator field is also employed in asymmetric cryptography. The generator field allows for the creation of a set of meaningful values that can be used in the key exchange process. These values have specific properties that enhance the security and efficiency of the encryption algorithm.

Lecture on Asymmetric Cryptography in Bitcoin, Blockchain, and Cryptoassets by the Center for Innovative Finance at the University of Basel

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The Key Exchange Process in Asymmetric Cryptography

Steps Involved

The key exchange process in asymmetric cryptography involves several steps to establish a shared secret key between two parties. These steps ensure that both parties can compute the same shared key without ever directly transmitting it over the insecure communication channel.

Alice’s Computation

Let’s walk through an example to better understand the key exchange process. Suppose Alice and Bob want to establish a shared secret key using asymmetric cryptography. Alice starts by generating her public and private key pair. She selects large prime numbers and a generator field, computes her public key, and keeps her private key secret.

Bob’s Computation

Bob follows a similar process to generate his own public and private key pair. He selects the same large prime numbers and generator field as Alice, computes his public key, and keeps his private key secret as well.

Public Exchange of Values

Alice and Bob then exchange their public keys over the compromised communication channel. This exchange is safe to perform, as the security of the encryption relies on the non-sharing of private keys. Even if an attacker intercepts the public keys, they cannot easily derive the private keys.

Computing ‘k’ from Exchanged Values

Using the exchanged public keys, Alice and Bob perform a series of mathematical operations to compute the shared secret key ‘k’. These calculations are designed in such a way that only the owners of the private keys can accurately compute the shared key. Once ‘k’ is computed, Alice and Bob can use it for symmetric encryption and decrypt messages securely.

Symmetric Encryption and its Limitations

Synchronous Communication Requirement

Symmetric encryption, which relies on a shared secret key, has its limitations compared to asymmetric cryptography. One fundamental limitation is the requirement for synchronous communication. Both parties need to possess the shared key before they can encrypt or decrypt messages. This poses challenges in scenarios where one party needs to exchange messages with several different parties concurrently.

Potential Security Drawbacks

Another limitation of symmetric encryption is the potential security drawbacks if the shared key is compromised. If an attacker gains access to the shared key, they can decrypt all messages encrypted with that key. This lack of forward secrecy makes symmetric encryption less suitable for scenarios where the security of future communication is critical.

Lecture on Asymmetric Cryptography in Bitcoin, Blockchain, and Cryptoassets by the Center for Innovative Finance at the University of Basel

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Introducing Asymmetric Encryption: RSA

Explanation of RSA

Now, let’s introduce RSA, one of the most widely used asymmetric encryption algorithms. RSA, named after its inventors Rivest, Shamir, and Adleman, relies on the properties of large prime numbers and modular arithmetic to provide secure encryption and decryption. It has become a cornerstone of modern encryption technology.

Public and Private Key Pair

In RSA, the public key consists of two components: the modulus ‘n’ and the encryption exponent ‘e’. The private key comprises the modulus ‘n’ and the decryption exponent ‘d’. These two keys form a complementary pair, enabling secure communication using RSA encryption.

Prime Numbers and Product Calculation

To generate an RSA key pair, we start by selecting two large prime numbers, ‘p’ and ‘q’. The product of these two primes, denoted as ‘n’, forms the modulus of the public and private keys. The factorization of ‘n’ into its prime factors is computationally difficult, providing the security foundation for RSA.

Choosing Value for ‘e’

The encryption exponent ‘e’ is then chosen, typically a small prime number. It must be coprime to the totient function of ‘n’. The totient function counts the number of positive integers less than ‘n’ that are coprime to ‘n’. The specific selection of ‘e’ ensures the mathematical properties necessary for secure encryption.

Deriving the Private Key

The decryption exponent ‘d’ is derived from ‘e’ and the totient function of ‘n’ using mathematical operations such as the extended Euclidean algorithm. The derivation of ‘d’ ensures that the private key possesses the necessary properties for secure decryption while remaining computationally difficult to derive from the public key.

Encrypting Messages Using the Public Key

Role of the Public Key

Once the public and private key pair is established using RSA, the public key plays a crucial role in the encryption process. Any sender who wishes to send a secure message to the recipient can use the recipient’s public key to encrypt the message. The encryption process involves modular exponentiation, transforming the plaintext message into a cipher that can only be decrypted by the recipient’s private key.

Cipher Generation

To generate the cipher, the plaintext message is raised to the power of the encryption exponent ‘e’ and then taken modulo ‘n’. This process ensures that the resulting cipher remains within the appropriate range for decryption using the recipient’s private key. The resulting cipher can be safely transmitted over the communication channel without jeopardizing the security of the message.

Decrypting Messages Using the Private Key

Using Private Key

The decryption of messages encrypted with RSA is performed using the private key. The recipient, who possesses the private key, can use it to recover the original plaintext message from the received cipher. The mathematical operations involved in the decryption process are the inverse of those used in encryption, relying on the decryption exponent ‘d’ and modular arithmetic.

Mathematical Operations on the Cipher

To decrypt the cipher, the recipient raises the cipher to the power of the decryption exponent ‘d’ and takes the result modulo ‘n’. This process effectively reverses the encryption process, transforming the cipher back into the original plaintext message. The recipient can now read the message securely, as only the private key holder possesses the necessary information to perform the decryption.


In conclusion, asymmetric cryptography revolutionized the world of secure communication by providing a solution for secure key exchange over compromised channels. Through the use of public and private key pairs, mathematical algorithms, and mathematical operations, secure encryption and decryption are made possible. Asymmetric encryption algorithms like RSA have become the bedrock of modern security technology, protecting sensitive information and enabling secure communication. By understanding the principles and concepts behind asymmetric cryptography, you are equipped to navigate the intricate world of secure communication in the digital age. Remember, by keeping your private key secret and embracing the power of asymmetric cryptography, you can communicate securely with confidence.

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