Ransomware is characterized by its ability to encrypt files on infected systems and subsequently demand payment for a decryption key, often leading to monetary loss for affected users and organizations. Worms are typically standalone malware that replicate themselves to spread to other computers, without the need for user interaction, but do not demand ransom for recovery. Trojans are malicious programs that disguise themselves as legitimate software but do not have the self-replicating ability of worms or the specific extortion function of ransomware. Viruses, like worms, can self-replicate and spread, but they usually require some form of user action to initiate and may or may not include ransomware characteristics. The correct answer is ransomware because it best fits the criteria of encrypting files and demanding payment.