Certified Bitcoin Professional Practice Exam

How does the SHA-256 algorithm contribute to Bitcoin?

1. It enhances transaction speeds

2. It secures the network through cryptographic hashing

3. It reduces mining difficulty

4. It allows for anonymous transactions

The correct answer is: It secures the network through cryptographic hashing

The SHA-256 algorithm plays a crucial role in securing the Bitcoin network through cryptographic hashing. SHA-256, which stands for Secure Hash Algorithm, is designed to produce a fixed-size, 256-bit hash output from input data of any size. This property ensures that even a minor change in the input will result in a drastically different hash output, adding a layer of integrity and security to the data being processed. In the context of Bitcoin, this hashing algorithm is integral to the mining process. When miners solve complex mathematical problems to add new blocks to the blockchain, they are essentially finding a hash that meets certain criteria, which contributes to the security and immutability of the entire blockchain. The use of SHA-256 ensures that the blocks are secure and tampering with any part of the block would require recalculating the hash for that block as well as all subsequent blocks, making it computationally infeasible for an attacker to alter any data without being detected. Furthermore, SHA-256 is a vital component of Bitcoin's Proof of Work consensus mechanism, which prevents double-spending and ensures that the network remains trustworthy and decentralized. In summary, the SHA-256 algorithm secures Bitcoin by ensuring that every transaction is cryptographically linked and that the integrity