Blockchain Fundamentals and Cryptography
This domain tests whether you can explain what a blockchain is at the data-structure and cryptographic level, and whether you can state precisely which security property each primitive provides. Exam items usually give a short scenario and ask what a hash, key, signature, or Merkle proof does - and does not - guarantee.
Core rules
- A blockchain is an append-only, replicated ledger. Each block header contains the hash of the previous header, so changing a past block changes every later hash.
- Hash functions (SHA-256, Keccak-256) are deterministic, fixed-length, one-way and collision-resistant. They provide integrity and commitments, not confidentiality.
- A Merkle tree condenses all transactions into one root. A Merkle proof demonstrates inclusion using roughly log2(n) hashes.
- Asymmetric cryptography: the private key signs, the public key verifies. ECDSA over secp256k1 and Ed25519 are common. A signature provides integrity, authenticity and non-repudiation, but not secrecy.
- Symmetric encryption (AES) handles bulk confidentiality; asymmetric keys typically wrap or exchange the symmetric key.
- Consensus (PoW, PoS, BFT variants) makes replicated state agree; cryptography only makes tampering detectable.
Worked example
A block contains transactions with hashes A, B, C and D. Pairs are hashed: AB = H(A||B), CD = H(C||D), and the root is H(AB||CD). An auditor must verify transaction C. The prover supplies C, D and AB. The auditor recomputes CD = H(C||D), then root = H(AB||CD), and compares it with the root stored in the block header. Three hashes were transmitted instead of four full transactions. Reasoning: the proof follows only the leaf-to-root path, so verification cost scales logarithmically with block size.
Traps
- Saying a hash “encrypts” data or can be reversed with the right key.
- Claiming a digital signature encrypts the message; it only signs a digest.
- Confusing a public key (shareable) with a private key (never disclosed).
- Assuming on-chain data is confidential because cryptography is involved.
- Treating PoW probabilistic finality as equivalent to BFT instant finality.