Question 1
4 marks
Digital signatures and proof-of-work mining in distributed cryptocurrency ledgers
- Networks
(a)
2 marks
- Identify two core technical characteristics of a digital signature used in peer-to-peer cryptocurrency networks:
- 1) Non-repudiation and cryptographic authenticity: A transaction signed by the sender's private key cannot be forged or disowned, proving conclusively that the legitimate owner initiated the transfer.
- 2) Mathematical uniqueness and message integrity: The signature is generated from the specific transaction payload and changes completely if even a single bit of the transaction data is altered, ensuring collision resistance and tamper detection.
Mentor tip
Focus on asymmetric cryptographic properties such as private-key signing for non-repudiation and transaction hash binding.
(b)
2 marks
- Identify two essential stages involved in the proof-of-work consensus sequence:
- 1) Block aggregation and proposed block header creation: The mining node collects pending unconfirmed transactions from the memory pool, verifies their signatures, constructs a Merkle tree, and combines the resulting Merkle root with the previous block's hash into a proposed block header.
- 2) Iterative cryptographic hashing against target difficulty: The miner increments a numerical counter (nonce) repeatedly, running SHA-256 over the block header until generating a digest with a value strictly below the network target threshold.
Mentor tip
Distinguish between assembling unconfirmed transactions into a block and calculating a nonce that meets the target difficulty constraint.

