Transacting on the Blockchain Week 01 Quiz Answers

Quiz 1: Cryptocurrencies, Protocol Tokens, and Utility Tokens

Q1. Which of the following is an example of a cryptocurrency? Select all that apply.

Answer: Bitcoin, Dash

Q2. Which of the following best describes a programmable blockchain asset that provides consumers access to services or resources within a DApp?

Answer: Utility token (app coin)

Q3. Which of the following are primarily designed to pay for the computational resources required to execute smart contracts as part of a DApp?

Answer: Answer: Utility token (app coin)

Quiz 2: Security Tokens, and Natural Asset & Commodity Tokens

Q1. A security token is a digital bearer asset (e.g. stock, bond, dividend, etc.) native to a blockchain.

Answer: True

Q2. What is a commodity token?

Answer: A digital token on the blockchain that is backed by a physical commodity (e.g. gold, oil, etc.)

Quiz 3: Crypto-collectibles, Crypto-fiat Currencies & Stablecoins

Q1. Which of the following can serve as a crypto-collectible?

• Virtual artwork
• Virtual trading cards (e.g. CryptoKitties)
• In-game purchases of unique virtual items (e.g. skins, weapons, property)

Q2. In 2017, Venezuela announced that it was launching a new cryptocurrency called the petro, backed by its vast oil reserves. Why were financial analysts and members of the cryptocurrency community skeptical about the Petro’s credibility?

Answer: All of the above

Quiz 4: ICOs

Q1. What does “ICO” stand for?

Answer: Initial Coin Offering

Q2. Many have argued that the term “ICO” is a bit of a misnomer. What kind of assets can an “ICO” represent? Select all that apply.

• ownership in a company
• access to a network

Quiz 5: Cryptoassets

Q1. What is a crypto asset?

Answer: A crypto asset is a digital asset that uses cryptography, a peer-to-peer network, and a public ledger to regulate the creation of new units, verify transactions, and secure transactions without a middleman.

Q2. Utility tokens (or “app coins”) are primarily designed to:

Answer: provide consumers with access to services or resources within a DApp

Q3. Zcash and other “privacy coins” are examples of this type of crypto asset:

Answer: Cryptocurrencies

Q4. Protocol tokens are primarily designed to:

Answer: Serve as a way for DApps to raise funds

Q5. Security tokens are:

Answer: An on-chain representation of an off-chain security

Q6. Royal Mint Gold (RMG) was an example of this type of crypto asset:

Answer: Commodity Token

Q7. CryptoKitties are a type of:

Answer: Crypto-collectible

Q8. How does a stablecoin minimize price volatility?

Answer: By pegging its value to an underlying asset, such as a fiat currency or commodity

Q9. Why is the term “Initial Coin Offering (ICO)” a misnomer?

Answer: Because investors aren’t buying “coins” per se, but rather crypto assets or tokens that can represent many different things (e.g. network access, securities, carbon credits, etc.)

Q10. What is/is the main benefit(s) of ICOs?

Answer: With no minimum investments, anyone in the world—even the poorest and most remote people—can become a venture capital investor

Transacting on the Blockchain Week 02 Quiz Answers

Quiz 1: What Are Smart Contracts?

Q1. Who is the “father” of smart contracts?

Answer: Nick Szabo

Q2. What is a smart contract?

Answer: Software that mimics the logic of an agreement and automates the execution of transactions

Q3. What is/are the benefits (s) of smart contracts? Select all that apply

• Smart contracts reduce transaction costs by eliminating the need for intermediaries.
• Smart contracts improve the security and privacy of the parties involved.
• Smart contracts help enforce the terms of an agreement by automating performance.

Quiz 2: Smart Contract Phases

Q1. Consider a vending machine that dispenses drinks. Which of the following statements represents the search phase of the deal cycle?

Answer: None of the above

Q2. Using the same vending machine scenario, which of the following statements represents the performance phase of the deal cycle?

Answer: IF sufficient payment is received, THEN the vending machine will dispense the correct drink

Q3. Which of the following is/are an example(s) of post-performance incentivization?

• A consumer’s rating of a business
• A reputation score on a social network

Quiz 3: Smart vs. Traditional Contracts

Q1. Dry code refers to:

Answer: Software code that is interpreted by a computer

Q2. In contrast to traditional legal contracts, smart contracts running on a blockchain are:

• Automated
• Predictable
• Global

Quiz 4: Smart Contracts and Law

Q1. What is the relationship between smart contracts and the traditional legal system?

Answer: Smart contracts and traditional contracts are complementary and work best in tandem

Q2. How does performance verification code assist in resolving smart contract breaches?

Answer: It detects a failure in execution and will seize the on-chain collateral of whoever breached the contract as payment for damages

Quiz 5: Smart Contracts

Q1. A smart contract is:

Answer: Software that mimics the logic of an agreement and automates the execution of transactions

Q2. What is/are the benefits (s) of using a smart contract?

Answer: All of the above

Q3. A key feature of a smart contract is:

Answer: It cannot be seized, stopped, or redirected to another address once it has been set in motion on a blockchain

Q4. What happens during the performance phase of a smart contract deal cycle?

Answer: The smart contract manages the collateral to affect an outcome

Q5. Wet code refers to:

Answer: Legal language that is interpreted by a human

Q6. How does a smart contract differ from a traditional legal contract?

Answer: A smart contract is executed by impartial technology (e.g. sensor-guided effectors), whereas a traditional contract contains rules and conditions that are subject to human judgment

Q7. How do smart contracts fit within the traditional legal system?

Answer: While smart contracts are inspired by and can replace some of the functions of traditional contracts, they are largely complementary

Q8. Traditional contracts tend to be biased toward their jurisdiction of origin. Conversely, a smart contract on a blockchain:

Answer: Applies the same rules and logic everywhere around the globe

Q9. Which of the following describes a potential application of smart contracts in the insurance industry?

Answer: A smart contract could automate the payout of a parametric contract following a measurable, insured event.

Q10. A key strategy for effectively implementing smart contracts in a business is:

Answer: None of the above

Transacting on the Blockchain Week 03 Quiz Answers

Quiz 1: Identity and Identifiers

Q1. Which of the following is/are example(s) of identifiers?

• A birth certificate
• A student ID
• A fingerprint

Q2. For some, a birth certificate can be challenging to obtain because it must be created and verified by a licensed hospital or midwife. According to UNICEF, what percentage of all births go unrecorded worldwide?

Answer: 10%

Q3. The government of India has implemented a 12-digit digital ID for every resident called a(n):

Answer: Aadhaar

Q4. What is/are the problem(s) with government-issued identifiers?

Answer: All of the above

Q5. What is/are the challenge(s) associated with storing our identifiers in centralized systems?

• Our data is out of our control; a company may use it for their own economic gain, or sell it to a third party without our knowledge.
• Porting our data from one system to another can be complicated and expensive.
• If a privacy violation occurs (e.g. a hack, identity theft) the responsibility falls on us to deal with the fallout.

Quiz 2: Identity on a Blockchain

Q1. What makes an identity system “self sovereign?”

Answer: The data you create, and all related rights of privacy, are under your individual control.

Q2. What is/are the feature(s) that a self-sovereign identity system must possess?

• It must be free of corporate, government, or third-party control
• It must be inclusive.

Q3. Which of the following represents a consortium of organizations who are collaborating on the creation of a blockchain-based “identity commons,” including the development of use-cases and standards for identity management?

Answer: Sovrin Network

Q4. If a user’s device is lost or stolen, this type of smart contract enables users to replace their private keys without having to replace their proxy identifier and all the assets that are associated with it.

Answer: controller contract

Q5. What is ERC-725?

Answer: A proposed standard for blockchain-based identity on the Ethereum network

Quiz 3: Identity

Q1. Which of the following best describes an identifier?

Answer: All of the above

Q2. What is/are the problem(s) with using a birth certificate as an overarching record of existence?

Answer: All of the above

Q3. India developed a digital ID for every resident called the Aadhaar. What was problematic about its implementation?

Answer: All of the Aadhaar’s demographic and biometric data was stored in a centralized database, which was hacked.

Q4. What is/are the problem(s) with storing identifiers in a centralized system?

Answer: All of the above

Q5. Which of the following should not apply to the design of an “identity commons?”

Answer: It must enforce the right to be forgotten.

Q6. What does it mean for an identity system to be “self-sovereign?”

Answer: That the data you create, and all related rights of privacy, are under your individual control

Q7. Which of the following describes a protocol for verifying that x is true, without knowing what x is or who it involves?

Answer: zero-knowledge proof

Q8. What is/are the function(s) of a proxy contract in a blockchain-based identity system?

Answer: All of the above

Q9. What is/are the function(s) of a controller contract in a blockchain-based identity system?

Answer: All of the above

Q10. Which of the following is a proposed standard for blockchain-based identity on the Ethereum network, issued by Fabian Vogelsteller?

Answer: ERC 725

Transacting on the Blockchain Week 04 Quiz Answers

Quiz 1: Six Inefficiencies in Financial Services

Q1. How does blockchain technology disrupt the process of financial attestation?

Answer: It enables two parties, who neither know nor trust each other, to transact and do business online.

Q2. On average, how long does it take for a transaction to clear and settle on the Bitcoin blockchain?

Answer: 10 minutes

Q3. What kind(s) of financial risk can blockchain technology help mitigate?

Answer: All of the above

Q4. Which of the following refers to a blockchain that that runs in parallel to a primary blockchain (e.g. the Bitcoin blockchain)—leveraging its established network, hardware infrastructure, and security, but having different features and functions from the primary blockchain?

Answer: sidechain

Quiz 2: The Golden Eight

Q1. What opportunity(ies) does blockchain technology offer for storing value?

Answer: Individuals will no longer need to rely on banks as the primary stores of value.

Q2. What opportunity(ies) does blockchain technology offer for lending value?

Answer: All of the above

Q3. What opportunity(ies) does blockchain technology offer for exchanging value?

Answer: It will cut settlement times on transactions from days and weeks to minutes and seconds.

Q4. What opportunity(ies) does blockchain technology offer for funding and investing?

Answer: All of the above

Quiz 3: New Frameworks for Accounting

Q1. Current accounting regimes rely upon managers to swear that their books are in order. Why is this problematic?

Answer: All of the above

Q2. In traditional accounting, the practice of recording a debit and a credit for each transaction is called:

Answer: double-entry accounting

Quiz 4: Rethinking Finance

Q1. Today’s global financial services industry is:

Answer: All of the above

Q2. Blockchain technology promises to mitigate several forms of financial risk. The most significant is _, which blockchain could eliminate completely.

Answer: counterparty risk

Q3. In today’s financial services industry, remittances take 3-7 days to settle, stock trades take 2-3 days to settle, and bank loan trades take an average of 23 days to settle. How long does it take a transaction to settle on the Bitcoin Lightning Network?

Answer: milliseconds to seconds

Q4. What impact will blockchain have on financial lending?

Answer: Consumers, entrepreneurs, and the unbanked will be able to access loans directly from peers

Q5. How will blockchain disrupt global trade (i.e. exchanging value)?

Answer: It will reduce settlement times on transactions.

Q6. How will blockchain affect financial investing?

Answer: It will enable new models of peer-to-peer financing through token generation events or Initial Coin Offerings (ICOs).

Q7. This system of accounting was invented in 15th century Italy by Luca Pacioli, which gave rise to modern accounting practices.

Answer: double-entry accounting

Q8. Why are traditional accounting practices ill-suited to the modern era?

Answer: All of the above

Q9. This alternative framework for accounting, originally conceived by Yuji Ijiri, has been reappropriated by some to mean the presence of a shared, cryptographically sealed receipt of transactions on a blockchain.

Answer: triple-entry accounting

Q10. What is/are the implication(s) of a “World Wide Ledger” for accounting?

Answer: All of the above

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