AIS ELEC 1 Reviewer: Midterm Chapters 2-3

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What is a key advantage of trading in digital currency according to the text?

Global reach (correct)
Lack of security
High transaction fees
Governmental backing

How are transactions in digital currency recorded?

Encrypted in multiple layers
Verified by governmental institutions
Subject to high fees
Permanently added to a ledger (correct)

What sets cryptocurrencies apart from traditional payments like cash and credit cards according to the text?

Digital and encrypted nature (correct)
High susceptibility to theft
Heavy reliance on third-party companies
Ease of tracking transactions

Why are transaction fees for trading in cryptocurrency appealing compared to traditional financial institutions?

They are much lower (C) Signup and view all the answers

Which feature of digital currency makes it harder to be stolen compared to physical cash?

Decentralized nature (D) Signup and view all the answers

What characteristic of cryptocurrency provides users with direct control over their funds?

Absence of middlemen (D) Signup and view all the answers

Why does the text mention that you cannot be 'ripped off' in a cryptocurrency transaction?

'Digital and encrypted' characteristics (B) Signup and view all the answers

What role does geographical boundaries play in the acceptance and use of cryptocurrency?

Are irrelevant to cryptocurrency use (D) Signup and view all the answers

'You Control Your Money' is highlighted in the text to emphasize what aspect of cryptocurrency?

'Absence of middleman' (C) Signup and view all the answers

What do big crypto-exchanges use to record transactions?

Internal databases that periodically synchronize with the blockchain (A) Signup and view all the answers

What are alternative hashing algorithms compared to in the text?

Various types of locks for securing blockchain information (D) Signup and view all the answers

Which of the following is NOT listed as an alternative hashing algorithm?

SHA-256 (C) Signup and view all the answers

What is a potential advantage of alternative consensus models like proof-of-stake over proof-of-work?

Lower latency and less computational power required (C) Signup and view all the answers

What type of wallets focus only on the most recent or unspent outputs, similar to credit card transactions?

Thin wallets (B) Signup and view all the answers

What is the term used in the text to describe the ability of blockchains to communicate with other blockchains?

Blockchain interoperability (C) Signup and view all the answers

What are sidechains described as in the text?

Independent blockchains that connect to their parent chains via a two-way bridge (D) Signup and view all the answers

What is the purpose of posting bond on blockchains like Tendermint, according to the text?

To make it costly to fork and potentially improve operability and security (A) Signup and view all the answers

Which of the following is NOT mentioned in the text as a type of dark pool?

Peer-to-Peer Dark Pool (D) Signup and view all the answers

What is the purpose of dark pools, as described in the text?

To operate internal databases of transactions that periodically synchronize with the blockchain (C) Signup and view all the answers