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Cryptocurrency Flashcards

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

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  1. What is a '51% attack' in blockchain?

    Answer: When a single entity controls more than half the network's mining power and can manipulate transactions

    A 51% attack occurs when a single miner or group controls the majority of a blockchain's hash rate, allowing them to double-spend coins or reverse transactions.

  2. What is 'wrapping' a cryptocurrency (e.g., Wrapped Bitcoin / WBTC)?

    Answer: Creating a tokenized version of one asset that can be used on a different blockchain

    Wrapping creates an ERC-20 or similar token that represents another asset (like BTC) 1:1, allowing it to be used within DeFi ecosystems on different blockchains.

  3. What does 'HODL' mean in cryptocurrency culture?

    Answer: Holding onto cryptocurrency long-term rather than selling during volatility

    HODL originated from a 2013 Bitcoin forum typo of 'hold' and became a mantra meaning to hold cryptocurrency despite market fluctuations rather than panic-selling.

  4. What is the role of a 'validator' in a Proof of Stake blockchain?

    Answer: To propose and attest to new blocks by locking up staked cryptocurrency as collateral

    Validators in PoS systems stake cryptocurrency as collateral and are chosen to create new blocks and verify transactions, earning rewards for honest participation.

  5. What is 'dollar-cost averaging' (DCA) in the context of crypto investing?

    Answer: Investing a fixed dollar amount at regular intervals regardless of price

    DCA involves investing a fixed amount of money into an asset at regular intervals, reducing the impact of volatility by averaging the purchase price over time.

  6. What is the 'Merkle tree' used for in a blockchain?

    Answer: Efficiently summarizing and verifying the integrity of all transactions in a block

    A Merkle tree is a hash-based data structure that allows efficient and secure verification of large sets of transaction data, with the Merkle root stored in each block header.

  7. Which of the following is a key risk unique to decentralized exchanges (DEXs) compared to centralized exchanges (CEXs)?

    Answer: Smart contract vulnerabilities that could lead to loss of funds

    DEXs operate via smart contracts, and bugs or exploits in that code can result in users losing funds directly, a risk that doesn't exist when using a custodial CEX.