Cryptocurrency Flashcards

What is a 'hard fork' in the context of blockchain technology?

Answer: A permanent divergence creating two separate blockchains

A hard fork creates a permanent divergence in the blockchain, resulting in two separate and incompatible chains after a certain block.

Which consensus mechanism does Ethereum use after 'The Merge' in 2022?

Answer: Proof of Stake

Ethereum transitioned from Proof of Work to Proof of Stake during 'The Merge' in September 2022, drastically reducing its energy consumption.

What is a 'gas fee' in the Ethereum network?

Answer: A fee paid to miners for including transactions in a block

Gas fees are payments made to compensate miners (or validators post-Merge) for the computational energy required to process and validate transactions.

What does 'DeFi' stand for in the cryptocurrency space?

Answer: Decentralized Finance

DeFi stands for Decentralized Finance, referring to financial services built on blockchain networks that operate without traditional intermediaries like banks.

What is an 'NFT'?

Answer: A non-fungible token representing unique digital ownership

An NFT (Non-Fungible Token) is a unique cryptographic token on a blockchain that certifies ownership of a specific digital or physical asset.

What is the primary purpose of a cryptocurrency 'whitepaper'?

Answer: A technical and conceptual overview of a cryptocurrency project

A whitepaper is a document that outlines the technical details, use case, tokenomics, and vision of a cryptocurrency project, most famously exemplified by Bitcoin's whitepaper by Satoshi Nakamoto.

What is 'yield farming' in DeFi?

Answer: Lending or staking crypto assets to earn rewards or interest

Yield farming involves depositing or lending cryptocurrency assets into DeFi protocols to generate returns in the form of interest, fees, or governance tokens.