Confusion over “family name” in English: What about double-barrelled last names?

The easy parts are the first and middle name. First name, obviously, would be "John", and the middle name would be any middle name the applicant may have.

The tricky part is the last name, and is a problem for a lot people coming from Spanish-speaking countries (I don't know at all about Portuguese). My understanding is that there are two options which are primarily used.

Option 1: Hyphenate
In this case, the applicant would list the last name as "Perez-Espinosa". It's cumbersome, yes, but it includes the entire name.

Option 2: Single name
The English-speaking cultures' tradition (I don't know of any exceptions) is that a person's last name is their father's last name. The Spanish-speaking tradition is that both the father's and mother's last name is applied. According to this website, the father's name is the one that is listed first and passed down to future generations (good thing I checked, I vaguely remembered it being the other way around). The option I'm getting at here is to list simply the name from the father (Perez in this case).

I know that both of these options are used by immigrants to the US from Spanish-speaking parts of the world, and I believe that which option is used is based on personal preference (although I may be wrong on that part).