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Blockchain & Cryptocurrency Integration Flashcards

7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Blockchain & Cryptocurrency Integration flashcards as text

  1. A fintech firm wants to issue digital securities on a blockchain. Which regulatory framework in the US most directly governs this activity?

    Answer: Securities Act of 1933 and SEC regulations

    Digital securities (security tokens) fall under SEC jurisdiction and must comply with the Securities Act of 1933, including registration or exemption requirements.

  2. What is the primary function of a Layer-2 blockchain solution such as the Lightning Network?

    Answer: To process transactions off-chain and settle final states on the main chain

    Layer-2 solutions process transactions off the main blockchain and periodically settle net results on-chain, dramatically increasing throughput and reducing fees.

  3. A DeFi lending protocol uses an Automated Market Maker (AMM). What determines the exchange rate between two assets in an AMM pool?

    Answer: A mathematical formula based on the ratio of assets in the liquidity pool

    AMMs use algorithms like the constant product formula (x*y=k) where prices are determined by the relative quantities of assets in the liquidity pool.

  4. Which consensus mechanism is used by Ethereum after 'The Merge' in September 2022?

    Answer: Proof of Stake (PoS)

    Ethereum transitioned from Proof of Work to Proof of Stake with 'The Merge,' reducing energy consumption by approximately 99.95%.

  5. In blockchain terminology, what is a '51% attack'?

    Answer: When a single entity gains majority hash power and can rewrite recent transaction history

    A 51% attack occurs when one entity controls over half the network's mining or validation power, enabling double-spend attacks by reorganizing recent blocks.

  6. A Central Bank Digital Currency (CBDC) differs from a stablecoin primarily because:

    Answer: CBDCs are issued and backed directly by a government central bank

    CBDCs are direct liabilities of the central bank, representing official government-issued digital money, unlike stablecoins issued by private entities.

  7. What does 'gas' represent in the Ethereum network?

    Answer: A unit measuring computational effort required to execute operations on the network

    Gas measures the computational work required for operations on Ethereum; users pay gas fees in ETH to compensate validators for processing transactions.