There are two important ways that Cryptography is used in Bitcoin system: for the secure transactions and security of the ledger. In the first one, the secure and anonymous transactions are ensured by using digital signature, which uses Cryptography to be encoded; any information regarding the transaction will be encoded and protected from the public.
In Bitcoin transaction, there are two cryptographically
encoded keys which ensure the security of trades: private and key public key (or address).
Private key is essentially the password to the access to your Bitcoin-wallet;
you will need your private key to spend your Bitcoin. One the other hand, one public
key can only be used once in a transaction with others; every time when you make other
transactions, new public key is generated for the specific trade.
Cryptography is also used to secure the integrity of the
public ledger. In Bitcoin’s ledger, every transaction is ‘linked’ with the
previous transaction, but the link is cryptographically encoded. Therefore,
older a transaction become, the transaction’s record is more secured.
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