Quiz 2 - CryptoCurrency

In blockchain cryptography, what is the primary purpose of a hash function?

To produce a fixed-length digital fingerprint of any input data

Which of the following is NOT a defining characteristic of a public blockchain?

Controlled access restricted to vetted participants only

In a Proof of Work (PoW) consensus mechanism, what do miners compete to do?

Solve a computationally difficult cryptographic puzzle first

What is the maximum total supply of Bitcoin that will ever exist?

21 million BTC

What makes a Non-Fungible Token (NFT) 'non-fungible' compared to regular cryptocurrency?

Each NFT is unique and not interchangeable with another NFT on a 1:1 basis

Why are stablecoins important to the crypto ecosystem?

They reduce volatility for trading and DeFi activity

Sharding aims to:

Improve scalability by splitting workload across network segments

One problem historically faced by Ethereum was:

Network congestion and high gas fees

Which mechanism helps stablecoins maintain price stability?

Pegging to reserve assets or algorithms

What is the fundamental structure of a blockchain?

A distributed, decentralized, public ledger

Which of the following is a core characteristic of most public blockchains?

Immutability of recorded data

What defines a "Public Blockchain"?

Anyone can join the network, read data, write transactions, and participate in consensus

What is a "Hybrid Blockchain"?

A network architecture that combines both public and private blockchain features

What is a major problem with Ethereum's early blockchain design?

Scalability issues

What created the split between Ethereum and Ethereum Classic?

A major hack of the DAO smart contract

Why are stablecoins widely used in DeFi?

Provide stable collateral for lending

A hard fork occurs when:

There is a permanent divergence from the previous version of the blockchain, creating two separate paths

In a Proof-of-Work consensus mechanism, what is the primary role of cryptographic hashing?

To ensure that finding a valid block hash requires significant computational effort, making the chain tamper-resistant

Which of the following best explains why altering a single block in a blockchain is computationally impractical?

Changing one block invalidates its hash, which cascades through all subsequent blocks, requiring re-mining the entire chain

How does Bitcoin's blockchain specifically solve the double-spending problem without relying on a trusted third party?

It uses a network of decentralized nodes that validate and timestamp transactions, making previously spent coins traceable on the public ledger

What distinguishes a public blockchain from a private blockchain in terms of participation and governance?

Public blockchains are open to anyone to read and participate in, while private blockchains restrict access and are controlled by a designated organization

Which of the following factors would most likely cause a significant short-term decline in Bitcoin's market valuation?

A major government announcing a ban or heavy regulatory crackdown on cryptocurrency exchanges

When was Bitcoin first introduced?

2009

Which of the following is not a type of blockchain network?

Blockchain powered by magic crystals

What is a key difference between fiat currency and digital currency like Bitcoin?

Fiat currency is issued by governments; Bitcoin is decentralized

What is double spending?

Spending the same digital currency more than once

How does blockchain prevent double spending?

Through distributed consensus and transaction verification

What was a major factor in the 2021 Bitcoin price surge?

Institutional adoption

Bitcoin reached nearly $20,000 during which major market event?

The 2017 crypto bull market

What is sharding in Ethereum?

Breaking the blockchain into smaller parts to increase scalability

Which factor strongly influences Bitcoin's price?

All of the above, Supply and demand, Market sentiment, Regulation and adoption

What are stablecoins designed to do?

Maintain a stable value by pegging to another asset

What is Bitcoin?

A digital currency

One important feature of blockchain is:

Transparency

The Byzantine Generals Problem is about:

The challenge of reaching consensus in distributed systems with potentially malicious actors

Bitcoin mining requires a lot of:

Electricity

A smart contract is:

Code that runs automatically on a blockchain

Which factor significantly affects Bitcoin's valuation?

Supply and demand

NFTs are:

Unique digital assets verified on blockchain

Blockchain history began primarily with:

Bitcoin

Cryptography in blockchain ensures:

Securing transactions and verifying identities

Which event marks the creation of the first blockchain?

Bitcoin whitepaper release in 2008

The history of Bitcoin's price is characterized by:

A stable, slow increase in value

Which of the following is NOT an advantage of digital currencies like Bitcoin over physical fiat currency?

Being backed by a physical commodity like gold

Which of the following are examples of real-world use cases for DeFi applications on Ethereum?

Overcollateralized lending, Decentralized asset exchanges (DEXs), Yield farming and liquidity pools.

What is the primary purpose of a "stablecoin"?

To maintain a stable value pegged to a real-world asset (like the US Dollar) to reduce price volatility

What makes a Non-Fungible Token (NFT) different from an ERC-20 token like Ethereum or a fungible token?

NFTs have unique properties and cannot be exchanged on a one-to-one basis with other tokens

In Bitcoin, why are blocks linked together using hashes of previous blocks?

To ensure immutability and detect tampering

What was CryptoKitties?

A blockchain game where users collect and breed digital cats

Which of the following is a common consensus mechanism?

Proof of Work

Why is Bitcoin mining often criticized environmentally?

It consumes large amounts of electricity

What is "fiat currency"?

Currency issued by governments and not backed by a commodity

Which type of blockchain requires permission to join and is typically used by private organizations?

Private/Permissioned Blockchain

Looking at Bitcoin's price history, what occurred during the "Halving" events?

The reward for mining new blocks was cut in half

What does "NFT" stand for in the context of Ethereum?

Non-Fungible Token

Decentralized Finance (DeFi) refers to:

Financial services built on blockchain without traditional intermediaries

What was CryptoKitties known for?

One of the first popular NFT blockchain games

What is a fork in blockchain?

A split in the blockchain creating two versions of the ledger

A hybrid blockchain combines features of:

Public and private blockchains

Ethereum is best known for enabling:

Smart contracts

Who introduced Bitcoin?

Satoshi Nakamoto

What consensus mechanism secures the Bitcoin network?

Proof of Work

Ethereum differs from Bitcoin primarily because Ethereum:

Supports programmable smart contracts while Bitcoin primarily functions as digital money

What is a block in blockchain?

A collection of verified transactions linked to previous blocks

What activity allows users to create a new CryptoKitty?

Breeding two existing CryptoKitties

Why did CryptoKitties cause congestion on Ethereum?

Too many smart contract and breeding transactions were executed

What makes NFTs different from cryptocurrencies like Bitcoin?

NFTs are unique and not interchangeable

On which blockchain were NFTs first widely popularized?

Ethereum

Which real-world use case is commonly associated with NFTs?

Digital art ownership

What is one factor that gives NFTs value?

Scarcity enforced by blockchain technology

What is the purpose of a consensus mechanism in blockchain?

To ensure all participants agree on the state of the ledger

Which statement best describes Ethereum's long-term goal?

To become a global decentralized computing platform

Which of the following is a major challenge for the Ethereum blockchain?

Network congestion and high transaction fees

Ether (ETH) is:

The native cryptocurrency used on the Ethereum network

Which is a major use case of Decentralized Finance (DeFi) on Ethereum?

Lending and borrowing without intermediaries

What are NFTs (Non-Fungible Tokens)?

Unique digital assets recorded on a blockchain

Which project famously demonstrated NFTs through digital collectibles?

CryptoKitties

What is the primary purpose of a blockchain?

To act as a decentralized and tamper-resistant ledger of transactions

Which consensus mechanism is used by Bitcoin to validate transactions?

Proof of Work

What is a "smart contract" in Ethereum?

A self-executing program stored on the blockchain that runs when conditions are met

What is the native cryptocurrency of the Ethereum network?

Ether

What is a blockchain?

A distributed ledger maintained across multiple nodes

What characteristic best describes blockchain technology?

Transparency and immutability

What is a consensus mechanism?

A method for reaching agreement among distributed nodes

What is one major limitation of Bitcoin that Ethereum attempts to address?

Bitcoin primarily supports simple transactions, while Ethereum allows programmable smart contracts and complex computations

What does the Ethereum Virtual Machine (EVM) do?

It executes smart contracts and computations on the Ethereum network

What payment is required to run computations on Ethereum?

Ether (gas fees)

What determines the amount of Ether required to execute a computation?

The amount of computational effort required

What programming language is most commonly used to create Ethereum smart contracts?

Solidity

In CryptoKitties, what makes each digital cat unique?

Genetic attributes stored in smart contracts

What is a "block" in a blockchain?

A collection of transactions grouped together

What links blocks together in a blockchain?

Cryptographic hashes

Why is blockchain considered "immutable"?

Data cannot easily be altered once recorded

What type of digital asset are CryptoKitties considered?

Non-fungible tokens (NFTs)

What is a "private key" used for in a cryptocurrency wallet?

To digitally sign transactions and prove you own the funds

In the Ethereum network, what is the specific role of the "Gas" (Ether) payment?

To pay for the computational effort needed to run smart contracts

In a Zero-Knowledge Proof (ZKP), what is the "Witness"?

The secret data known only to the prover used to create the proof

What is the main job of a "Miner" in the Bitcoin network?

To validate transactions and add new blocks to the chain

What is a "Genesis Block" in a blockchain?

The very first block of a blockchain that sets the initial rules

What does the Ethereum Virtual Machine (EVM) represent?

A global, decentralized computer for executing code