encryption
Encryption converts readable data into an unreadable form that can only be reversed with the correct key. It underlies the security of private communications, financial systems, and many of Bitcoin's cryptographic operations.
Encryption is the process of transforming readable data into a scrambled form using a mathematical algorithm and a key, so that anyone who intercepts the data without the key sees only meaningless ciphertext. Symmetric encryption uses the same key to both encrypt and decrypt, making it fast and efficient but requiring the communicating parties to first share that key securely. Asymmetric encryption uses a key pair: a public key that anyone can use to encrypt a message, and a private key held only by the recipient to decrypt it. Most secure systems on the internet use a combination of both approaches.
In the context of Bitcoin, encryption is most directly relevant to wallet security. Many wallet applications encrypt the stored private key file with a password, so that an attacker who obtains the file cannot use it without the password. Bitcoin transactions themselves are not encrypted, because all transaction data is intentionally public and must be verifiable by every node on the network. The security of Bitcoin rests on cryptographic concepts related to but distinct from encryption, particularly hashing and digital signatures. The cryptography entry covers the broader cryptographic foundations of Bitcoin in more detail.