RSA Algorithm Explained in Simple Words – Blockchain FAQs

Ever wanted the RSA algorithm explained to you in simple terms? In this short section, you will learn what the RSA algorithm is, how it works and its applications in the cryptocurrency world.

RSA algorithm explained

The RSA algorithm is an asymmetric cryptographic system, which enables public-key encryption and is widely used to secure sensitive data. It is particularly useful for sending information over an insecure network such as the internet.

The algorithm was first published in the 1970s by Ron Rivest, Adi Shamir, and Leonard Adleman (hence RSA). 

How does the RSA algorithm work?

RSA generates two different mathematically linked keys – one public and one private. The public key can be shared with everyone, whereas the private key must be kept secret. 

Why? Well, only the private key can be used to decrypt the message or data that has been encrypted through the public key.

Here’s how it works in practice: 

  1. A user sends its public key to the server and requests some confidential data.
  2. The server encrypts the data using the user’s public key and sends back the encrypted data.
  3. The user receives the data and decrypts it using their private key. 

How is RSA applied to cryptocurrencies?

Most blockchains follow a similar method to the RSA algorithm for the creation and encryption of blockchain wallets. Here’s how the asymmetric encryption is applied to cryptos: 

When creating a cryptocurrency wallet, a public address and a private key are generated. 

  • Your public address will be used to receive cryptocurrencies and consult your balance on the Blockchain. 
  • Your private key, on the other hand, will be used in correlation to this public key to access and spend your crypto. 
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