Cryptocurrency Core Cryptographic Principles 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?

Accepted Answer

Non-repudiation

Answer

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?

Accepted Answer

Hashing

Answer

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?

Accepted Answer

Private key to create, public key to verify.

Answer

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?

Accepted Answer

ECC provides equivalent security with smaller key sizes.

Answer

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?

Accepted Answer

Collision resistance

Answer

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.

Cryptocurrency Practice Test

Cryptocurrency Practice Test

Cryptocurrency Core Cryptographic Principles Questions and Answers