Cryptocurrency Core Cryptographic Principles Questions and Answers — Questions and Answers
Question 1: Which of the following cryptographic principles ensures that a sender of a cryptocurrency transaction cannot later deny having sent it?
- Confidentiality
- Integrity
- Non-repudiation (Correct answer)
- Authentication
Correct answer: Non-repudiation
Non-repudiation is the assurance that someone cannot deny the validity of something. In cryptocurrency, digital signatures provide non-repudiation by mathematically binding a transaction to the sender's private key. This creates undeniable proof that the owner of the private key authorized the payment.
Question 2: A user initiates a Bitcoin transaction. The transaction data is processed by a function that produces a unique, fixed-length string of characters. Even a minor change to the transaction data would result in a completely different string. What is this cryptographic process called?
- Symmetric Encryption
- Hashing (Correct answer)
- Key Generation
- Decryption
Correct answer: Hashing
This scenario describes a cryptographic hash function. Hash functions take an input of any size and produce a fixed-size output called a hash. They are deterministic (same input always produces the same output) and a small change in the input creates a completely different hash (the avalanche effect). This is crucial for ensuring the integrity of transaction data in a block.
Question 3: In public-key cryptography, which key is used to create a digital signature, and which key is used to verify it?
- Public key to create, private key to verify.
- The same secret key is used for both creation and verification.
- Private key to create, public key to verify. (Correct answer)
- A session key to create, a master key to verify.
Correct answer: Private key to create, public key to verify.
A digital signature is created by using the sender's private key to encrypt a hash of the message or transaction data. The recipient, or anyone on the network, can then use the sender's publicly available key to decrypt the signature and verify that it matches the transaction data, confirming authenticity and integrity without revealing the private key.
Question 4: What is the primary advantage of Elliptic Curve Cryptography (ECC) over RSA in the context of cryptocurrencies like Bitcoin?
- ECC is simpler to implement and understand.
- ECC provides equivalent security with smaller key sizes. (Correct answer)
- ECC is an older, more time-tested algorithm.
- ECC is resistant to attacks from quantum computers.
Correct answer: ECC provides equivalent security with smaller key sizes.
Elliptic Curve Cryptography (ECC) can provide the same level of security as the RSA algorithm but with significantly smaller key sizes. This leads to faster computations and lower resource usage, which is highly advantageous for efficiency in blockchain networks and on resource-constrained devices.
Question 5: Which of the following is a core property of a cryptographic hash function used in blockchain technology?
- Reversibility
- Variable output size
- Collision resistance (Correct answer)
- Key-dependency
Correct answer: Collision resistance
Collision resistance is a critical property of cryptographic hash functions. It means that it should be computationally infeasible to find two different inputs that produce the exact same hash output. This is essential for the integrity of the blockchain, as it prevents malicious actors from creating fraudulent transactions that hash to the same value as a legitimate one.
Question 6: A developer is building a system where large amounts of data need to be encrypted quickly. However, the initial secret key exchange must be highly secure over an insecure channel. Which cryptographic approach would be most suitable?
- Using only symmetric encryption for both key exchange and data encryption.
- A hybrid approach: asymmetric encryption for secure key exchange and symmetric encryption for data. (Correct answer)
- Using only a hash function for both key exchange and data encryption.
- Using only asymmetric encryption for both key exchange and data encryption.
Correct answer: A hybrid approach: asymmetric encryption for secure key exchange and symmetric encryption for data.
This scenario is best addressed with a hybrid approach. Asymmetric (public-key) encryption is ideal for securely exchanging a secret key because it solves the key distribution problem. However, it is computationally intensive for encrypting large amounts of data. Symmetric encryption is much faster for bulk data encryption. Therefore, the common practice is to use asymmetric encryption to securely share a symmetric key, and then use that symmetric key to encrypt the actual data.
Cryptocurrency Core Cryptographic Principles Questions and Answers
Which of the following cryptographic principles ensures that a sender of a cryptocurrency transaction cannot later deny having sent it?