Public Key

Public key encryption is an essential component of public key cryptography for securing transactions. With the help of this key, the plain text (transaction data) converts into ciphertext (encrypted code) and is sent to the recipient's address. Afterward, the receiver decrypts the transaction using the private key assigned to them. As a result, the privacy and anonymity of the transaction is maintained in the network. In addition, it creates no space for malicious actors and hackers to interrupt the transfer. However, the transfer process can fail if these keys do not match. Hence, it is vital to store the keys safely in the system.

The public key cryptosystem, also known as asymmetric cryptography, uses two keys for encryption. It works on a distributed cryptographic protocol that is available to all. This system uses two keys, unlike private keys, where only one key is used for encryption. As a result, users can easily shield their messages and send them to others. However, the security of these keys depends on the size and length of the key. On average, the public key size ranges between 256  and 3072 bits. 

Usually, public keys also provide a public address, a hashed version of the former. Since the key's characters are long, the algorithm comprises and creates a short address. Users can use this key to receive funds from other users within the network. For example, crypto traders utilize these keys to receive crypto tokens in a peer-to-peer network. Also, it acts like an authenticator to verify and validate digital signatures. For security concerns, the certificate authority ensures the authentication of these keys.

The public key cryptosystem works on different algorithms that use a defined process to generate these keys. Although there are many types, let us look at the major ones in the blockchain network. 

#1 - RSA (Rivest-Shamir-Adelman) Algorithm

RSA is the oldest algorithm used for public critical infrastructure, and it was developed by Ron Rivest, Adi Shamir, and Leonard Adleman in 1977. It is used in the private sector as it creates a strong security layer of numbers, making it impossible to guess. This number is typically an integer that contains prominent characters. It is usually 1024 or 2048 bits long. Even if a hacker wants to decode it, they must factorize it to guess the private key. As a result, the RSA algorithm advances the security levels of the transaction. 

#2 - DSA (Digital Signature Algorithm) 

As the name suggests, DSA is an algorithm that utilizes the power of digital signatures. Here, a private key is used for signing and a public key for verification. Government agencies use it to create digital signatures and verify the messages. For example, the Federal Information Processing Standard incorporated this algorithm in 1994 to maintain privacy while signing important documents. It was developed in 1991 by the National Institute of Standards and Technology.

#3 - Elliptic Curve

The security of the public key cryptosystem depends on the algorithm's complexity. As a result, a complex system of mathematics, like the elliptic curve, is used in this algorithm to generate keys, where a pair of integer coordinates (x,y) on the curve act as public keys. In comparison, private keys are integers anywhere on the plane.

They are usually 257-bit integers, compared to private keys, which are 256-bit long. They are applicable in digital signatures, encryption, and key agreements.

Let us look at some real-time and hypothetical examples of public key encryption to understand the concept better:

Example #1

Suppose Jenny and Paul are two business friends owning their respective businesses. Here, the former runs a boutique store and usually buys materials from the latter. As a result, the majority of the payment is in cryptocurrency. So, when Jenny bought $2000 worth of inventory, she entered Paul's wallet address and sent the crypto tokens. On the other hand, Paul received them at the earliest. However, he has to enter his private key to access the funds. Once entered, he can use the tokens sent by Jenny.

In this case, Jenny and Paul received a public and private key to create a crypto wallet. When Jenny sent the tokens to the latter, she entered Paul's public address. This key encrypts the entire transaction. When Paul received tokens, he used his private key to decrypt them. As a result, Jenny encrypted the public key, and the private key provided by Paul was matched. 

Example #2

According to news reports, as of July 2023, Microsoft experienced a security breach involving a signing key, not a ransomware attack. A China-linked hacker group called Storm-0558 used a compromised consumer MSA key to forge authentication tokens, allowing them to gain unauthorized access to email accounts, including those of U.S. government officials. While Microsoft confirmed the breach impacted consumer and enterprise email systems, the issue primarily involved email data, and there's no evidence of other tech giants being affected by the same incident.

Public key infrastructure is visible in various sectors, from business technology to finance. However, the function of these keys differs. So, let us look at the use cases of them:

#1 - Data and Fund Transfer

These keys are viable in securing transaction details across different networks. As a result, a major application of these keys is visible in the blockchain network. It facilitates easy, fast, and secure transfer of crypto tokens across different wallets. Likewise, even corporations can send messages and data to their peers for confidentiality. 

#2 - Creation of Digital Signatures

Firms can use public keys to sign contracts and legal documents in legal and real estate matters. It ensures that the verifier uses this key to validate the agreement and a private key to sign it. 

#3 - Secure Socket Layer (SSL)

In many organizations, the management uses the SSL protocol to secure website communication. As a result, the data between the client and the company remains strong and secure. Besides, the network's email and messaging services also utilize the public keys to enhance communication between the hierarchy.

#4 - Network Storage 

The usage of public key cryptography is also noticeable in cloud services. The system stores confidential information and files so employees can easily perform data backup. Later, the data is encrypted using a colleague or senior executive's key. Thus, the latter can access the data from cloud storage using their private key.