Certified Bitcoin Professional Practice Exam

What does a digital signature confirm?

1. It verifies the user’s identity only

2. It confirms the authenticity of data using the correct private key

3. It guarantees the security of the entire blockchain

4. It eliminates the need for encryption

The correct answer is: It confirms the authenticity of data using the correct private key

A digital signature plays a crucial role in the realms of cryptography and blockchain technology by confirming the authenticity of data. Specifically, it uses asymmetric encryption, where a user's private key is employed to generate the signature on a piece of data. This process ensures that the signature is unique to both the data and the signer. When a digital signature is created, it binds not only the individual's identity to the data, but also ensures that the data has not been altered in transit. If any modification occurs after the signature has been applied, the signature would no longer be valid upon verification. In this way, the digital signature helps to ensure both the integrity and authenticity of the data it protects. The other choices do not fully capture the comprehensive role of a digital signature. While it is true that a digital signature can reflect the identity of the signer, it goes beyond merely verifying identity. It does not guarantee the security of the entire blockchain, as that involves other mechanisms and factors. Furthermore, a digital signature does not eliminate the need for encryption; rather, it often works in conjunction with encryption techniques to secure and validate data.