Cryptocurrency Flashcards

Which of the following is the most common method of keeping bitcoins?

Answer: Wallet

Bitcoins, and other cryptocurrencies, are most commonly kept in digital wallets. These wallets don't physically store the coins but rather hold the private keys necessary to access and manage a user's cryptocurrency addresses on the blockchain. Wallets can be software-based (desktop, mobile, web) or hardware-based, offering varying levels of security and convenience.

Which of these US states has enacted the BitLicense cryptocurrency regulation?

Answer: New York

New York State was the first US state to enact a specific regulatory framework for businesses dealing with virtual currencies, known as the 'BitLicense,' in 2015. This regulation requires companies engaging in virtual currency business activity within or involving New York to obtain a license from the New York Department of Financial Services (NYDFS). It aims to protect consumers and prevent illicit activities within the state.

The FBI shut down which Ross Ulbricht-run website that allowed users to buy drugs with Bitcoin?

Answer: Silk Road

Silk Road was a notorious online black market and the first modern darknet market, primarily known for facilitating the sale of illegal drugs and other illicit goods using Bitcoin. It was operated by Ross Ulbricht, known as 'Dread Pirate Roberts,' and was shut down by the FBI in 2013, leading to Ulbricht's arrest and conviction.

What is the meaning of UTXO?

Answer: Unspent Transaction Output

UTXO stands for Unspent Transaction Output, a fundamental concept in Bitcoin and other cryptocurrencies. A UTXO represents a discrete amount of cryptocurrency that has been received in a transaction but has not yet been spent. When you spend Bitcoin, you are essentially consuming one or more UTXOs and creating new UTXOs as change and payment to the recipient.

What was the name of the well-known Japanese Bitcoin exchange that went bankrupt in 2014?

Answer: Mt. Gox

Mt. Gox was once the largest Bitcoin exchange in the world, handling over 70% of all Bitcoin transactions at its peak. In 2014, the Tokyo-based exchange collapsed after revealing that it had lost hundreds of thousands of bitcoins due to alleged hacking and mismanagement. Its bankruptcy was a major event that significantly impacted the early cryptocurrency market and highlighted security risks.

What is the definition of a hash function?

Answer: Takes an input of any length and returns a fixed-length string of numbers and letters

A hash function is a cryptographic algorithm that takes an input (or 'message') of any size and produces a fixed-size string of characters, known as a hash value or digest. This process is one-way, meaning it's computationally infeasible to reverse the hash to find the original input. Hash functions are crucial for data integrity, digital signatures, and blockchain security.

Merkle Trees were created by who?

Answer: Ralph Merkle

Merkle Trees, also known as hash trees, were patented by Ralph Merkle in 1979. They are a fundamental data structure used in computer science and cryptography, particularly in blockchain technology. Merkle Trees efficiently verify the integrity and authenticity of data by hashing blocks of data in a tree-like structure, allowing for quick and secure verification of large datasets.

What is the location of the bitcoin central server?

Answer: None of the above

Bitcoin is a decentralized cryptocurrency, meaning it does not have a central server or controlling authority. Its network is distributed across thousands of nodes worldwide, with each node maintaining a copy of the blockchain. This decentralized architecture is a core feature that makes Bitcoin resistant to censorship and single points of failure, ensuring no single entity controls the network.

What distinguishes blockchain as tamper-proof?

Answer: Immutability

The tamper-proof nature of blockchain stems from its immutability. Once a block of transactions is added to the blockchain, it cannot be altered or deleted because each new block contains a cryptographic hash of the previous block. Any attempt to change an old block would invalidate all subsequent blocks, making such tampering easily detectable and virtually impossible to execute across the distributed network.

When did the Bitcoin Network begin?

Answer: January 2009

The Bitcoin network officially began on January 3, 2009, when its pseudonymous creator, Satoshi Nakamoto, mined the genesis block (Block 0). This event marked the launch of the world's first decentralized digital currency and the beginning of the blockchain era. The whitepaper describing Bitcoin was published a few months prior, in October 2008.

What is a Dash Masternode and how does it work?

Answer: A node that provides additional supervisory network services

A Dash Masternode is a specialized type of node on the Dash cryptocurrency network that provides advanced services beyond basic transaction processing. These services include InstantSend (instant transactions), PrivateSend (transaction mixing for privacy), and governance functions. Masternodes require a collateral of 1,000 DASH and are rewarded for their services, contributing to the network's security and functionality.

IPFS is an acronym that stands for

Answer: Interplanetary File System

IPFS stands for Interplanetary File System. It is a peer-to-peer hypermedia protocol designed to make the web faster, safer, and more open by allowing users to store and share data in a distributed file system. Instead of locating content by *where* it's stored (like a URL), IPFS locates content by *what* it is (its cryptographic hash), making it resilient and decentralized.

True or false: Blockchain and Bitcoin are the same thing.

Answer: A) False

Explanation The correct answer False

What was the name of the first academic study that described bitcoin as it is now known?

Answer: The Bitcoin Whitepaper

Explanation Abstract of the Bitcoin Whitepaper Without passing via a banking institution, a peer-to-peer version of electronic cash would allow internet payments to be transmitted directly from one party to another.

What is a LiteClient, and how does it work?

Answer: Allows you to interact with the blockchain without downloading the whole blockchain

Explanation You can see material in the Data Discovery, Story Board, Alerts, and Publications menus using the Lite client. Expand, drill, dice, pivot, sort, filter, and other context-menu actions are available in the Lite client.

UTXO is used by Bitcoin, while Ethereum uses:

Answer: Account Balance

Explanation The Unspent Transaction Output (UTXO) system is used by Bitcoin, while the Account Based model is used by Ethereum. Both models are, at their most basic level, models for tracking database state, and each model's implementation in its respective platform serves a distinct purpose and plays a specific role in the platform's wider structure.

Who has access to a record stored on a blockchain?

Answer: Multiple people simultaneously.

Explanation The correct answer Multiple people simultaneously.

Is it possible to change records that have been uploaded to a blockchain?

Answer: No – they cannot be altered.

Explanation Records can't be changed once they've been posted to the blockchain, even by the record's owner, giving transactions a high level of security. The AICPA will continue to watch legislation around the country due to the disruptive power of emerging technologies.

What are sidechains, exactly?

Answer: Any mechanism that allows tokens from one blockchain to be securely used within a completely separate Blockchain

Explanation The correct answer Any mechanism that allows tokens from one blockchain to be securely used within a completely separate Blockchain

Is it possible to program a blockchain to automatically record transactions?

Answer: B) Yes

Explanation It is also possible to program the blockchain to automatically record transactions. The monetary worth of those transactions is frequently calculated in cryptocurrencies—that is, digital currencies that are not regulated by a central bank—rather than in US dollars or any other standard centralized currency.