CCE Cryptocurrency Core Concepts 2 — Questions and Answers
Question 1: What is the primary purpose of a cryptographic hash function in blockchain?
- Encrypt user private keys
- Produce a fixed-size digest from arbitrary input data (Correct answer)
- Generate new cryptocurrency tokens
- Compress transaction data for storage
Correct answer: Produce a fixed-size digest from arbitrary input data
Cryptographic hash functions take arbitrary input and produce a fixed-size output (digest) used to verify data integrity.
Question 2: Which property ensures that a hash function output cannot be reversed to reveal the original input?
- Collision resistance
- Avalanche effect
- Pre-image resistance (Correct answer)
- Determinism
Correct answer: Pre-image resistance
Pre-image resistance means it is computationally infeasible to derive the original input from its hash output.
Question 3: In a UTXO-based blockchain like Bitcoin, what does UTXO stand for?
- Unified Token Exchange Output
- Unspent Transaction Output (Correct answer)
- Universal Transfer Exchange Operation
- Unverified Token Exchange Order
Correct answer: Unspent Transaction Output
UTXO stands for Unspent Transaction Output, representing discrete amounts of cryptocurrency available to be spent.
Question 4: What role does the Merkle root play in a Bitcoin block header?
- It stores miner identity
- It provides a single hash summarizing all transactions in the block (Correct answer)
- It records the current network difficulty
- It links to the previous block's address
Correct answer: It provides a single hash summarizing all transactions in the block
The Merkle root is a single hash derived from hashing all transactions in a block, enabling efficient and tamper-evident verification.
Question 5: What is a soft fork in the context of blockchain protocol upgrades?
- A backward-incompatible change requiring all nodes to upgrade
- A backward-compatible upgrade where old nodes still accept new blocks (Correct answer)
- A complete replacement of the blockchain with a new chain
- A temporary suspension of block production
Correct answer: A backward-compatible upgrade where old nodes still accept new blocks
A soft fork introduces tightened validation rules that old nodes still accept, making it backward-compatible.
Question 6: Which consensus mechanism requires validators to lock up cryptocurrency as collateral to participate in block creation?
- Proof of Work
- Delegated Proof of Authority
- Proof of Stake (Correct answer)
- Proof of Burn
Correct answer: Proof of Stake
Proof of Stake requires validators to stake (lock up) coins as collateral, which can be slashed for dishonest behavior.
Question 7: What is the significance of the 'genesis block' in a blockchain?
- It contains the highest-value transaction ever recorded
- It is the first block hard-coded into a blockchain with no predecessor (Correct answer)
- It is the block that resets the blockchain after a hard fork
- It stores all wallet addresses created at network launch
Correct answer: It is the first block hard-coded into a blockchain with no predecessor
The genesis block is block zero, hard-coded into the client software as the immutable starting point of the chain.
CCE Cryptocurrency Core Concepts 2
What is the primary purpose of a cryptographic hash function in blockchain?