Certified Bitcoin Professional Practice Exam

What is a common use of cryptography in Bitcoin?

1. To ensure faster transactions.

2. To secure user identities and private keys.

3. To prevent market manipulation.

4. To increase transaction fees.

The correct answer is: To secure user identities and private keys.

The use of cryptography in Bitcoin primarily focuses on securing user identities and protecting private keys. In the Bitcoin network, cryptography serves as the backbone for securing financial transactions and wallet information. Each Bitcoin transaction is digitally signed using a user's private key, which ensures that only the rightful owner can authorize the transfer of their bitcoins. This cryptographic signing process also guarantees the integrity of the transaction, making it impossible for an outside party to alter the transaction details once they are completed. Moreover, cryptography is critical in creating anonymous transactions, as it helps to protect the identities of users through public-private key pairs. While transaction speed, market manipulation prevention, and transaction fees are important aspects of the Bitcoin ecosystem, they are not primarily addressed through cryptography. Instead, these issues are typically managed through network design and economic incentives. Thus, the role of cryptography is fundamentally about securing user identification and safeguarding their assets within the Bitcoin network.