Practice Test Geeks(CCE) Certified Cryptocurrency Expert Practice Test
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Initial Coin Offerings (ICOs) Flashcards

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  1. What is a 'SAFT' (Simple Agreement for Future Tokens) and why was it developed?

    Answer: A legal framework allowing accredited investors to fund token projects before network launch while deferring token delivery

    The SAFT is an investment contract sold only to accredited investors, with actual tokens delivered later when the network is functional and tokens may qualify as utilities.

  2. Which country was among the first to completely ban ICOs in September 2017?

    Answer: China

    China banned ICOs in September 2017, calling them illegal fundraising and requiring all ICO proceeds to be refunded.

  3. In token economics, what is a 'token burn' mechanism and how does it benefit holders?

    Answer: Permanently destroying a portion of tokens to reduce supply, potentially increasing scarcity and value

    Token burns permanently remove tokens from circulation, reducing total supply which can create deflationary pressure and potentially increase each remaining token's value.

  4. What is 'bounty campaign' in the context of an ICO?

    Answer: A reward program offering tokens to community members for completing tasks like promotion, bug reporting, or content creation

    ICO bounty campaigns distribute tokens as compensation for community contributions such as social media promotion, translation, bug discovery, or content creation.

  5. What is the primary difference between a 'public sale' and a 'private sale' in a typical ICO structure?

    Answer: Private sales offer tokens at a discount to select investors before the public round opens

    Private (or pre-sale) rounds offer discounted tokens to institutional investors and large contributors before the main public token sale begins.

  6. What regulatory exemption do many US-based ICOs attempt to use under Regulation D to avoid full SEC registration?

    Answer: Rule 506(c) — allowing general solicitation when selling only to accredited investors

    Regulation D Rule 506(c) allows ICOs to raise unlimited funds from accredited investors with general solicitation, without full SEC registration, by filing a Form D.

  7. What is 'tokenomics' and why is it critical to evaluate before investing in an ICO?

    Answer: The economic design of a token including supply, distribution, incentives, and mechanisms affecting value

    Tokenomics encompasses all economic factors of a token — total supply, inflation rate, distribution allocation, and utility — which directly impact long-term value sustainability.