CBC Cryptocurrency & Smart Contracts — Questions and Answers
Question 1: What is the primary purpose of cryptocurrency?
- To function as a centralized form of currency
- To provide secure and decentralized transactions (Correct answer)
- To replace physical cash entirely
- To function only as an investment vehicle
Correct answer: To provide secure and decentralized transactions
Cryptocurrency is a digital asset that operates on blockchain technology to facilitate secure and decentralized transactions.
Question 2: Which blockchain network is most commonly associated with smart contracts?
- Bitcoin
- Ethereum (Correct answer)
- Litecoin
- Ripple
Correct answer: Ethereum
Ethereum is the most widely used blockchain for deploying smart contracts, allowing automated transactions without intermediaries.
Question 3: How do smart contracts execute transactions?
- Through manual human verification
- By automatically executing predefined conditions (Correct answer)
- By relying on traditional banking systems
- By requiring approval from a central authority
Correct answer: By automatically executing predefined conditions
Smart contracts are self-executing programs that trigger transactions when predefined conditions are met, removing the need for intermediaries.
Question 4: Which feature makes cryptocurrency transactions secure?
- Publicly visible private keys
- Cryptographic encryption (Correct answer)
- Centralized transaction validation
- Unlimited reversibility of transactions
Correct answer: Cryptographic encryption
Cryptographic encryption ensures that cryptocurrency transactions are secure, tamper-proof, and protected from fraud.
Question 5: What is the main advantage of using smart contracts in financial transactions?
- They increase dependence on traditional banks
- They reduce costs and speed up transactions (Correct answer)
- They require extensive third-party oversight
- They only function on private blockchains
Correct answer: They reduce costs and speed up transactions
Smart contracts eliminate the need for intermediaries, reducing costs and increasing transaction speed and security.
Question 6: Which factor can impact the scalability of smart contracts?
- Decentralized security
- Network congestion (Correct answer)
- Use of cryptographic hashing
- Blockchain immutability
Correct answer: Network congestion
Network congestion can slow down smart contract execution, increasing fees and reducing efficiency in blockchain transactions.
CBC Cryptocurrency & Smart Contracts
What is the primary purpose of cryptocurrency?