How is cryptography utilized in cryptocurrencies?

• A. For linking blocks via cryptographic hashes and securing transactions
• B. For user authentication only
• C. For compressing data
• D. For random number generation only

Answer: (A)

Cryptography underpins trust in cryptocurrencies by ensuring integrity and authenticity of the ledger. Blocks are chained using cryptographic hashes—the hash of the previous block is included in the current block, and the block’s own hash reflects its contents. This makes any tampering detectable because altering a transaction or block changes its hash, breaking the chain and signaling tampering to the network. Inside each block, a Merkle tree aggregates all transactions into a single root hash, enabling efficient proof that a specific transaction is included. Transactions are authorized with digital signatures: a sender signs the transaction with their private key, and others can verify the signature with the corresponding public key, proving ownership without revealing private keys. This combination of hash chaining, Merkle proofs, and digital signatures provides integrity, authenticity, and non-repudiation for the system. The other options describe narrower roles—authentication only, data compression, or reliance on randomness—whereas cryptography in cryptocurrencies primarily secures the ledger and the transfer of value.