Privacy in Blockchains,
I believe what you are referring is the privacy in blockchains. This is in itself very huge topics for example zcash use zksnark with pour transactions, mint transactions. A mint transaction allows a user to convert a specified number of non-anonymous bitcoins (from some Bitcoin address) into the same number of zerocoins belonging to a specified Zerocash address. A pour transaction allows a user to make a private payment, by consuming some number of coins (owned by this user) in order to produce new coins.
Monero (unlinkability and untracebility) use cryptonight (stealth addresses and ring signatures etc.) But lets first have a look at privacy mechanism concepts:
- unlinkability : ensures that a user may make multiple uses of resources or services without others being able to link these uses together
- unobservability : ensures that a user may use a resource or service without others, especially third parties, being able to observe that the resource or service is being used
- Untraceability: Property of maintaining routes unknown to either external or internal attackers
- anonymity : ensures that a user may use a resource or service without disclosing the user’s identity. The requirements for anonymity provide protection of the user identity. Anonymity is not intended to protect the subject identity
- pseudonymity : A pseudonym can be considered as a mapping of the identifier “real name” into another name.
- encryption: is the process of encoding messages or information in such a way that only authorized parties can access it. Protection of the item of information, in contrast to observability which was related to the protection of the exchange processes of this item. The process of converting information or data into a code, especially to prevent unauthorized access and observation. (Encrypting the content of an email represents a typical example of a mechanism contributing to the protection of the identity of the person via content information hiding.)
- Absonymity: is where the real world identity is transparent to the relying party (although they may still wish to verify with a third party; the relying party may not, for example, be able to determine for themselves whether a passport is real). It can be very inconvenient to the individual to have to use this form if identification in the absence of anything better (e.g. the UK driving licence reveals name and address on the front of the card).
I wouldnt make any statement about blockchain does not use encryptions. Because it depends on requirements, like the example of monero and zcash.
Bitcoin is pseudonymous. In the original Satoshi whitepaper, it was recommended that Bitcoin users use a new address for each transaction to avoid the transactions being linked to a common owner. In existing deployments of distributed ledgers, users identify themselves
using pseudonyms — or even more anonymous identifiers — that they create themselves. The use of pseudonyms is important for two reasons:
First, distributed ledgers are transparent, meaning their contents are globally visible, so having users reveal their real world identities would completely violate their privacy.
Second, allowing users to generate their own identifiers is necessary to preserve the openness of the system and allow anyone to join.
The reason why EEC was chosen over RSA in Bitcoin and Ethereum is because it offers the same level of security as RSA by consuming far less bits. Eg. for a 256-bit key in EEC to offer the same level of security RSA will have to provide a 3072-bit key. Similarly, for a 384-bit key in EEC the RSA will have to provide a 7680- bit key to provide the same level of security! As can be seen, EEC is far more efficient than RSA.
So lets have a simple overview of the how signing process work ?
Suppose Alice wants to send 5 BTC to Bob. She will follow the following steps:
- She will create transaction and sign it off with her private key. So the transaction will be something like DFCD…
- She will the send the transaction to Bob’s public address.
- Bob can then decrypt the message by using Alice’s public key to verify that it was indeed Alice who sent him the bitcoins and the transaction is deemed complete.
So, as can be seen, public key cryptography aka asymmetric cryptography is one of the backbones of blockchain.