What is the entropy in cryptocurrency?
“Without entropy, cryptocurrency is insecure”
why would said this?Entropy itself is an important law of thermodynamics, usually defined as “a measure of disorder or randomness.” A more understandable definition might be that it is “a measure of energy distribution.” Entropy is unstoppable and irreversible, because every transmission/transfer/exchange of energy will cause some energy (no matter how small the amount) to be transferred/dissipated into our environment.
In the end, all the energy in the universe will be dissipated into itself, and all the energy will reach thermodynamic equilibrium. This is the so-called thermal death of the universe, because all energy is equal, so no energy can be transferred anymore.How does that apply to cryptocurrency…
What is the entropy in cryptocurrency?
When a user creates a new cryptocurrency wallet, they are using entropy to create a private key.
The creation of the private key uses high entropy (randomness), it is so random and disordered that it is impossible to see the same combination twice for any purpose.
It is similar to a deck of cards. A deck of cards has 52 cards, which means that each time the cards are shuffled, each of the 52 cards may be in a different position, and this deck of cards is likely to end up in a combination that is extremely unlikely to appear again. . In fact, the number of possible combinations for a deck of cards is 8.06e+67, which is approximately 80,658,175,170,943,878,571,660,636,856,403,766,975,289,505,440,883,277,824,000,000,000,000. This also means 225.58 bits of entropy.
The same is true for cryptocurrencies. Many wallets are secret recovery phrases consisting of 12 to 24 words (also known as seed phrases, mnemonic phrases, etc.).
These 12 (or 24) words are randomly extracted from the 2048 possible word pool, and then placed through the mechanism of generating an unlimited number of key pairs (public and private keys), which can be used as a wallet .
But what makes these 12 words safe? Two things: this is the randomness of the way they are selected and the mechanism of using this random selection as a seed.
Using 12 random words means using 128 bits of entropy. This is less than the entropy of a deck of cards, but it is still sufficient, because with our current technology, it would take millions of years to brute force it. Of course, if we can make some breakthroughs in quantum technology and create a quantum computer, it will be much faster… but that is far away.
Cryptocurrency is touted as a trustless environment. In most cases, it is unreliable; you can not trust decentralized projects with open source code, and you don’t have to trust the blockchain, because it is there and you can check and verify it yourself.
When we realize that at the highest level of all these, cryptography is determined by entropy, and entropy is completely random. We believe that this entropy is random enough that the cryptographic system will always remain secure.
Entropy and cryptography are magical mechanisms that are trustworthy.