Certified Bitcoin Professional Practice Exam

Which of the following statements about digital signatures is true?

1. They can be easily forged by skilled hackers

2. They provide a high level of security and authenticity

3. They are not used in cryptocurrency

4. They are only used in traditional banking

The correct answer is: They provide a high level of security and authenticity

Digital signatures provide a high level of security and authenticity because they use cryptographic techniques to ensure the integrity and origin of a message or document. When a digital signature is created, a unique hash of the message is generated and then encrypted with the sender's private key. This process means that any alteration of the message after signing will render the signature invalid, thus guaranteeing that the content has not been tampered with. The verification process involves using the sender's public key to decrypt the signature and compare the resulting hash to that of the received message. If they match, it confirms that the message was not altered and was indeed signed by the holder of the private key, ensuring both authenticity and integrity. This is especially crucial in fields like cryptocurrency, where secure transactions are paramount for trust in the system. Digital signatures are widely implemented in various technologies, ensuring their role extends beyond any singular application or industry.