Certified Bitcoin Professional Practice Exam

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What is the hashing algorithm used by Bitcoin?

SHA-512
SHA-1
RIPEMD-160
SHA-256

The correct answer is: SHA-256

The hashing algorithm used by Bitcoin is SHA-256 (Secure Hash Algorithm 256-bit). This algorithm is crucial for the functioning of Bitcoin as it is utilized in the process of mining and generating new blocks within the blockchain. SHA-256 ensures a high level of security, as it produces a fixed-size output (256 bits) that is computationally infeasible to reverse-engineer, making it difficult to derive the original input from the hash value. This characteristic is essential for maintaining the integrity of the blockchain by securing transactions and safeguarding against forgery. Additionally, SHA-256 plays a vital role in the Proof of Work mechanism that Bitcoin employs. Miners must find a value (nonce) that, when combined with the current block's data and then hashed using SHA-256, produces a hash that meets the network's difficulty target. This not only secures the network but also incentivizes users through the mining rewards. In contrast, other algorithms listed, such as SHA-1 and SHA-512, along with RIPEMD-160, are either outdated, designed for different use cases, or not used in the context of Bitcoin's blockchain technology. Hence, the choice of SHA-256 is foundational for Bitcoin's security and operational structure.