Blockchain & Crypto
Along with being composed of blocks and using a standard protocol, what are three other attributes of a public blockchain?
It has a consensus mechanism. It has no centralized controlling authority. It is permissionless.
Which three of the following statements are true regarding Dai (DAI)?
It is pegged to the U.S. dollar. If the price of Ethereum drops precipitously, the value of DAI could also fall. It uses game theory and overcollateralization with Ethereum to ensure its value.
Which three of the following statements regarding USD Coin (USDC) are correct?
Its developer, Circle Ltd., routinely publishes the results of third-party audits of its collateral. It is the second-largest stablecoin by market capitalization. Many investors believe that it is a safer stablecoin than USDT.
Not as expensive as a cryptocurrency brokerage firm, users can buy, sell, or trade cryptocurrency either for other cryptocurrencies or for regular (fiat) money such as U.S. dollars, for a standardized per-trade fee when trading through:
a traditional cryptocurrency exchange
When first executing decentralized financial (DeFi) transactions, developers were paid in Ethereum, which was recorded as GWEI or one-billionth of an Ethereum coin. GWEI became known as ether or simply ___.
gas
A device similar to a USB drive that gives you access to your cryptocurrency is referred to as a cryptocurrency wallet.
hardware
The unique identifying code contained in each block in a blockchain is called its ___.
hash
Because it was built on a proof-of-work blockchain, Ethereum (Ethereum 1.0) has Blank______ gas fees than a proof-of-stake cryptocurrency such as Solana.
higher
The software that allows an owner to access a cryptocurrency account is called a private . This typically grants the owner access to their wallet.
key
When a victim is lured into clicking on a link that allows the perpetrator to access the victim's cryptocurrency wallet, it is known as a ___ hack.
matches Choice social engineering
In the proof-of-work (PoW) consensus mechanism, a miner solves an unpredictable math problem, this solution is called a(n) ___ and allows the miner to create another block in the blockchain, such as a Bitcoin in the Bitcoin blockchain (cryptocurrency).
nonce
Select three commonly used types of cryptocurrency wallets.
online wallets paper wallets hardware wallets
Blockchain construction builds on the concept of switching.
packet
Also called direct trading platforms or over-the-counter (OTC), ___ involve low or no transaction fees.
peer-to-peer (P2P) cryptocurrency exchanges
Most cryptocurrency hardware wallets incorporate a small keypad that requires the user to add a Blank______ before accessing their private key (and their cryptocurrency).
personal identification number (PIN)
When scammers describe their big gains and provide a fraudulent link with an easy mechanism to purchase the cryptocurrency and then defraud investors, it is called a ___ .
pig butchering scam
Most private corporate blockchains, such as Microsoft Blockchain, use the Blank______ consensus mechanism.
proof-of-authority (PoA)
Select three consensus mechanisms that some newer blockchains are using.
proof-of-burn (PoB) proof-of-contribution (PoC) proof-of-history (PoH)
Transaction fees (gas fees) per transaction on PoS blockchains are miniscule compared to those conducted on ___ blockchains.
proof-of-work
A consensus mechanism that demands large amounts of computing power, with the associated energy demands, is the __ consensus mechanism.
proof-of-work (PoW)
A consensus mechanism that involves an algorithm that creates an unpredictable math problem that can only be solved with significant computing power is called a ___ consensus mechanism.
proof-of-work (PoW)
Select three blockchain consensus mechanisms.
proof-of-work (PoW) proof-of-authority (PoA) proof-of-stake (PoS)
For purposes of security, wallets are typically accessed through a combination of:
public and private keys
Scams and fraud, hacking, and simply losing your private key, along with volatility, are associated with buying cryptocurrency.
risks
One scam, which occurred with a cryptocurrency called Squid, is where developers create a new cryptocurrency, use social media to create hype about the coin, and then delete the blockchain itself, leaving investors with absolutely nothing. This is known as:
rug pull
An agreement where the terms are written on a blockchain is referred to as a contract.
smart
The basis of decentralized finance (DeFi) is the contract.
smart
Most successful hacks that occur today are conducted through:
social engineering
One of the largest cryptocurrency collapses occurred in May 2022 when the value of Luna, the native cryptocurrency of TerraUSD (UST), dropped to nearly zero. Luna is a , meaning that its value is theoretically pegged to value of another asset.
stablecoin
In an attempt to reduce cryptocurrency volatility, developers created Blank______, which are pegged or "tethered" to a less volatile asset such as gold or U.S. dollars.
stablecoins
A consensus mechanism that typically requires those who wish to add a block to put up a number of the blockchain's native coins as collateral is referred to as a proof-of-___ mechanism.
stake
Because owners of large amounts of collateral in the blockchain are more likely to be selected as validators, the dynamic of the rich getting richer is a criticism of the proof-of- (PoS) consensus mechanism.
stake
Unlike proof-of-work (PoW) consensus mechanism protocols, proof-of- (PoS) protocols allow individuals to "forge" new blocks by placing a certain amount of their existing blocks up as collateral.
stake
An asset that retains its worth rather than depreciating over time, such as precious metals and fine art, is an example of ___.
store-of-value assets
Bitcoin and Litecoin, because they are established proof-of-work (PoW) coins, are considered __.
store-of-value coins
Select the three items that will be included in every block in a blockchain.
the unique information identifying the block that precedes it a hash a timestamp
Choose three methods by which investors buy, sell, and store cryptocurrencies.
through the use of a peer-to-peer exchange through the use of wallets through a cryptocurrency exchange
To help ensure the strength of the blockchain, blocks can only be added in certain:
time intervals
The three main types of cryptocurrency exchanges include:
traditional peer-to-peer (P2P) brokerage
The first major cryptocurrency, Bitcoin, was developed to be an alternative currency that could not be manipulated by any government entity. This is why it is called a store-of- cryptocurrency
value
Because cryptocurrency is very liquid, and it has no intrinsic value other than the faith that holders place in the currency, its price tends to be very ___.
volatile
Select three categories of risks associated with cryptocurrency trading.
volatility hacking scams and fraud
A cellphone app that provides access to a user's cryptocurrency private key is often called a hot or online
wallet
To buy, sell, or use cryptocurrency, you must have access to a secure computer code. These codes (private keys) are stored in cryptocurrency .
wallets
A major disadvantage of using a proof-of- (PoW) protocol is that miners must use vast amounts of computing power, requiring correspondingly large amounts of electricity, to mine additional blocks for the chain.
work
The most commonly used consensus mechanism, with the drawback that it requires large amounts of computing power (and electricity) as the blockchain grows, is called the proof-of- consensus mechanism.
work
If you wish to purchase Ethereum (ETH) with your Bitcoin (BTC), you would use wBTC, which stands for a Bitcoin token.
wrapped
Originally developed as a cryptocurrency exchange and built on the Ethereum blockchain, (BNB) developed its own blockchain based on PoA and boasts a transaction time of 60 transactions per second.
Binance
Some cryptocurrencies have value just because they store value and have a limited number of blocks. The largest cryptocurrency by market cap is . It is limited to 21 million blocks (coins).
Bitcoin
The first widely used blockchain was created in 2008 to support the cryptocurrency called:
Bitcoin
The largest cryptocurrency by market capitalization, , is accepted by well over 100,000 merchants.
Bitcoin
One potential issue with the point-of-stake (PoS) consensus mechanism is that if an owner purchases over ___ percent of the blocks (coins), that owner could potentially stop any future transactions.
Choice 50
The native cryptocurrency of the Cardano blockchain is called ___.
Choice ADA
The Litecoin blockchain was created to be a faster store-of-value coin than ___ (BTC).
Choice Bitcoin
The most popular cryptocurrency brokerage firm (exchange) in the world is ___.
Choice Coinbase
Created by MakerDAO and built on the Ethereum blockchain, ___ is pegged to the U.S. dollar through the use of game theory and overcollateralization with Ethereum.
Choice Dai
Gold has value in part because the amount of gold in circulation does not vary significantly. For this reason, many believe that cryptocurrency, based on ___ technology, will also maintain its value.
Choice blockchain
Unlike coins, NFTs do not reside on one specific ___.
Choice blockchain
So that investors have confidence in a stablecoin, developers must ___ the stablecoin.
Choice collateralize
Significantly, over 1 billion of these people have mobile devices. This means that a robust DeFi system has the potential to reach and assist a huge underserved market. DeFi stands for __ finance.
Choice decentralized
The same artist might paint two very similar paintings, but each will still be unique in some way. This means that they are non-___.
Choice fungible
Servers that host the database are known as public ledgers because they are accessible to everyone and do not require that users place their trust in any individual. This means they are ___.
Choice permissionless
Circle LTD, the developer of USDC, routinely publishes the results of third-party audits of its collateralization. Many believe that this makes USDC the safest ___ for investors.
Choice stablecoin
In May 2022, TerraUSD (UST) and Luna collapsed when Bitcoin and Ethereum values dropped precipitously. UST was a __, meaning its value was theoretically pegged to and collateralized to the U.S. dollar
Choice stablecoin
In an attempt to reduce cryptocurrency volatility, developers created ___, which are pegged or "tethered" to a less volatile asset such as gold or U.S. dollars.
Choice stablecoins
To add a block to a PoS blockchain, you must put up existing blocks (coins) as collateral. This collateral is called a ___.
Choice stake
Blockchain technology builds on the packet-___ concept in which each packet connects to the previous packet according to specific software.
Choice switching
To purchase Ethereum with Bitcoin, you would use a wrapped Bitcoin (wBTC) to create what is referred to as a wrapped ___.
Choice token
Similar to a vending machine, ___ requires no salesperson and the exchange is anonymous.
a smart contract
Which three of the following statements are true when it comes to DApps?
DApp construction began several years ago on the Ethereum (ETH) blockchain. PoS blockchains significantly lower DApp development costs. DApps are sophisticated smart contracts that can be accessed anonymously.
Traditional finance (TradFi) uses centralized organizations such as banks and credit unions to facilitate transactions for customers. ___ uses smart contracts built on blockchains.
Decentralized finance (DeFi)
If you purchase Ethereum (coins), the transaction operates on the Blank______ blockchain, since it is a native coin.
Ethereum
Seeing the success of Bitcoin's blockchain, but wanting to capitalize on the ability to create smart contracts, the developers of the Blank______ blockchain made it more flexible and faster than Bitcoin's blockchain.
Ethereum
Some blockchains charge fees (called gas fees) for transactions. The first major blockchain that enabled decentralized financial (DeFi) transactions was .
Ethereum
Select three true statements regarding the potential impact of decentralized applications (DApps).
One example of a financial DApp is Orca, which is built on the Solana blockchain. Decentralized applications (DApps) could potentially replace all centralized apps. One gaming DApp is Alien Worlds, where players can mine or purchase coins called Trilium (TLM) to compete in the Alien World metaverse.
An advantage of using a peer-to-peer (P2P) cryptocurrency exchange is that:
P2P exchanges have low or no transaction fees
Binance's blockchain uses the ___ consensus mechanism.
PoA
To remedy the slow transaction time issue associated with PoW blockchains such as Ethereum 1.0 and Bitcoin, ___ blockchains were created, allowing for far faster transactions.
PoS
Unlike Bitcoin or Ethereum, which are proof-of-work (PoW) blockchains, ___ (SOL) is a proof-of-stake (PoS) blockchain.
Solana
Bitfinex developed the largest stablecoin (by market capitalization). This stablecoin, tethered to the U.S. dollar, is called ___.
Tether (USDT)
Which three of the following statements are true regarding Tether (USDT)?
Tether is pegged to the U.S. dollar. The largest stablecoin by market capitalization is Tether (USDT). Tether has been sued for not being able to prove that its stablecoin is not adequately collateralized.
A cryptocurrency's supply is controlled by a protocol called Blank______ that distributes control among the users and participants.
a consensus mechanism
Writing down your private key and storing it in a secure site is referred to as using:
a paper wallet
After mining the genesis block and an estimated 1 million Bitcoin, Blank______ apparently disappeared from Bitcoin in July 2010.
a person or persons who called themselves Satoshi Nakamoto
If all parties wanted to update a smart contract, they would have to build an additional contract, called ___.
a proxy contract
PoA consensus mechanisms are often used by private blockchains, such as those used by corporations. PoA stands for proof-of-.
authority
Choose three reasons why Bitcoin has value.
because it can be used to purchase certain items such as Teslas because some investors believe the price of Bitcoin (BTC) will increase in the future because it can be used as legal tender in some countries such as El Salvador
A technology that attempts to ensure that once a piece of software is constructed it cannot be changed is known as technology. Bitcoin is an example of a cryptocurrency that is built on this technology.
blockchain
Cryptocurrency coins work with their native
blockchain
Coinbase is the world's most popular cryptocurrency (exchange) firm.
brokerage
An emerging consensus mechanism that requires miners to permanently destroy a certain number of tokens in order to create a new block is called proof-of- (PoB).
burn
One potential use of blockchains may be to help with supply tracking to ensure items such as blueberries and romaine lettuce is fresh and clean when shipped and illicit items such as "blood diamonds" are kept off the market.
chain
Select three common means of tethering stablecoins.
collateralize with a corresponding currency collateralize with cryptocurrency collateralize with non-currency assets
How cryptocurrency is created depends upon the mechanism of the blockchain on which the cryptocurrency is based.
consensus
Unlike other large accessible databases that are controlled by corporate entities, such as Netflix or Spotify, public blockchains are hosted on a public ledger, which can be considered a huge database, that stores the data for a blockchain and essentially runs as a peer-to-peer network. This means they have no:
controlling central authority
Digital money that is based on a blockchain is called
cryptocurrency
Performing services similar to those of a stock exchange, a traditional exchange allows owners to trade Bitcoin for Ethereum (for example).
cryptocurrency
An example of a gaming DApp is Alien Worlds, where players can mine or purchase coins called Trilium (TLM) to compete in the Alien World metaverse. DApp stands for applications.
decentralized
Sophisticated applications, built on smart contracts that can be accessed anonymously, are called applications (DApps). DApps operate much like any other app on your smartphone or computer.
decentralized
As more and more individuals become increasingly knowledgeable about cryptocurrency trading, P2P cryptocurrency have grown in popularity.
exchanges