CBC Security & Regulatory Compliance — Questions and Answers
Question 1: What is the primary security feature of blockchain technology?
- Centralized control of data
- Decentralized structure with cryptographic security (Correct answer)
- Easily modifiable transaction records
- Reliance on a single entity for security
Correct answer: Decentralized structure with cryptographic security
Blockchain's decentralized structure eliminates a single point of failure, making it resistant to hacking and fraud.
Question 2: Which regulatory body oversees cryptocurrency compliance in the United States?
- Federal Communications Commission (FCC)
- Securities and Exchange Commission (SEC) (Correct answer)
- Department of Education (DOE)
- National Aeronautics and Space Administration (NASA)
Correct answer: Securities and Exchange Commission (SEC)
The SEC regulates securities and investment aspects of cryptocurrency, ensuring compliance with financial laws.
Question 3: How does blockchain technology enhance data privacy?
- By storing personal data in a public ledger
- By encrypting transaction data for security (Correct answer)
- By allowing unlimited data modifications
- By removing encryption for transparency
Correct answer: By encrypting transaction data for security
Blockchain uses cryptographic encryption to secure transaction data, ensuring privacy and protection against tampering.
Question 4: Which compliance measure helps prevent money laundering in cryptocurrency transactions?
- Ignoring user identities
- Implementing Know Your Customer (KYC) procedures (Correct answer)
- Allowing anonymous transactions
- Removing transaction tracking
Correct answer: Implementing Know Your Customer (KYC) procedures
Know Your Customer (KYC) procedures help verify user identities, preventing illegal activities like money laundering.
Question 5: What is a common security risk in blockchain networks?
- Automatic self-correction of fraudulent transactions
- 51% attack allowing control over transaction validation (Correct answer)
- Unlimited scalability without security trade-offs
- Decentralized network ensuring full immunity from attacks
Correct answer: 51% attack allowing control over transaction validation
51% attacks occur when a single entity gains control of most of a blockchain's mining power, allowing fraudulent transaction validation.
Question 6: Which regulation is critical for businesses using blockchain in financial transactions?
- General Data Protection Regulation (GDPR) (Correct answer)
- Food and Drug Administration (FDA) guidelines
- Federal Aviation Regulations (FAR)
- Maritime Security Act (MSA)
Correct answer: General Data Protection Regulation (GDPR)
The General Data Protection Regulation (GDPR) requires businesses to comply with strict data protection and privacy laws when handling customer data on blockchain.
CBC Security & Regulatory Compliance
What is the primary security feature of blockchain technology?