What is Cryptography?
Bitcoin is called a cryptocurrency because of its heavy use of cryptography. Here we'll take a quick look at symmetric and asymmetric encryption, as well as the two cryptographic functions that Bitcoin uses: digital signatures and hashing.
Hashes
A hashing algorithm takes data, any amount of data, and produces from it a fixed-length unique identifier. Changing even one bit in the data feed into a hashing algorithm will produce a very different hash, and there is no way to guess what the hash of any given data will be. Hashing is what is called a one-way function. A hash can be easily produced from data, but that hash can not be turned back into the original data. Or at least cryptographers have yet to discover how to do this with any decent hashing algorithm.
Hashes have some very interesting utility. They can be used as unique identifiers, they can be used to represent data while obscuring the data itself, they can be used to detect any data tampering, and they are used in a unique way in Bitcoin's Proof-of-Work mining.