Blockchain 101 Certification Tokens, Wallets & Digital Assets 3

Question 1

What is the UTXO (Unspent Transaction Output) model used in Bitcoin?

Accepted Answer

A ledger model where each transaction consumes previous outputs and creates new unspent outputs

Answer

In the UTXO model, each transaction spends one or more previous unspent outputs and creates new outputs, making the balance the sum of all unspent outputs for a given address.

Question 2

What are 'gas fees' on the Ethereum network?

Accepted Answer

Fees paid in ETH to compensate validators for the computational resources used to process transactions

Answer

Gas fees are payments in ETH (denominated in gwei) that users pay to validators to compensate for the computation required to execute and include their transaction.

Question 3

How is a blockchain transaction cryptographically authorized before broadcasting?

Accepted Answer

The transaction data is hashed and signed with the sender's private key

Answer

Transactions are authorized by hashing the transaction data and applying an asymmetric digital signature using the sender's private key, which nodes can verify using the corresponding public key.

Question 4

What does a transaction 'confirmation' mean in a blockchain context?

Accepted Answer

Each new block added on top of the block containing the transaction, increasing finality assurance

Answer

Each block mined on top of the block that contains your transaction counts as one confirmation, and more confirmations make it exponentially harder for the transaction to be reversed.

Question 5

What is the primary purpose of a stablecoin in the digital asset ecosystem?

Accepted Answer

To provide price stability by pegging the token's value to a stable asset like the US dollar

Answer

Stablecoins maintain a stable value by pegging to a reserve asset (fiat, commodities, or algorithmic mechanisms), reducing the volatility inherent in most cryptocurrencies.

Blockchain 101 Certification Practice Test

Blockchain 101 Certification Practice Test

Blockchain 101 Certification Tokens, Wallets & Digital Assets 3