Mixed Deck — All Cryptocurrency Topics Flashcards

What is a 'replay attack' in the context of blockchain hard forks?

Answer: Rebroadcasting a valid transaction from one chain to have it executed on the other chain

After a hard fork, a replay attack broadcasts a valid transaction from the original chain on the new chain, potentially draining funds on both chains simultaneously.

In a DAO governed by a smart contract, what typically happens when a proposal passes?

Answer: The smart contract automatically executes the on-chain actions defined in the proposal after a timelock

On-chain governance contracts automatically execute approved proposals (treasury transfers, parameter changes) after a mandatory timelock period, removing the need for trusted intermediaries.

What are sidechains, exactly?

Answer: Any mechanism that allows tokens from one blockchain to be securely used within a completely separate Blockchain

Explanation The correct answer Any mechanism that allows tokens from one blockchain to be securely used within a completely separate Blockchain

What is a Dash Masternode and how does it work?

Answer: A node that provides additional supervisory network services

A Dash Masternode is a specialized type of node on the Dash cryptocurrency network that provides advanced services beyond basic transaction processing. These services include InstantSend (instant transactions), PrivateSend (transaction mixing for privacy), and governance functions. Masternodes require a collateral of 1,000 DASH and are rewarded for their services, contributing to the network's security and functionality.

What is a '51% attack' in cryptocurrency networks?

Answer: When a single entity controls more than half of the network's mining hash rate

A 51% attack occurs when one entity controls the majority of mining power, allowing them to double-spend coins or reverse transactions.

What is an Automated Market Maker (AMM) in DeFi?

Answer: A protocol that uses liquidity pools and algorithms to price assets

An AMM uses liquidity pools and mathematical formulas to automatically price and swap assets without needing a traditional order book.

A DeFi project team is preparing to launch a new lending protocol. To build trust with potential users and investors, they engage a third-party firm to conduct a thorough review of their smart contract code to identify potential vulnerabilities, logic errors, and security flaws. What is this process called?

Answer: A security audit

A security audit is a comprehensive assessment of a DeFi project's smart contract code conducted by specialized third-party firms. The primary goal is to identify and fix security vulnerabilities, such as reentrancy, integer overflows, and access control issues, before the protocol is deployed. This process is crucial for protecting user funds and building confidence in the project's security.

Which hashing algorithm does Bitcoin's proof-of-work system use?

Answer: SHA-256

Bitcoin uses SHA-256 (Secure Hash Algorithm 256-bit) for its proof-of-work mining process.

What does 'gas' represent on the Ethereum blockchain?

Answer: A unit measuring the computational effort required to execute an operation

Gas quantifies computation on Ethereum; each operation (e.g., addition, storage write) has a fixed gas cost, and users pay gas_used × gas_price in ETH to compensate validators.

Which regulatory body has primary oversight over crypto commodity derivatives in the United States?

Answer: Commodity Futures Trading Commission (CFTC)

The CFTC has jurisdiction over derivatives markets, including crypto futures, options, and swaps, particularly for commodities like Bitcoin.

A new online collective wants to manage a shared treasury and make decisions about funding projects based on member votes. They want the rules for governance and fund allocation to be transparent and automatically enforced by code. Which type of organization would best suit their needs?

Answer: A Decentralized Autonomous Organization (DAO).

A Decentralized Autonomous Organization (DAO) is an entity governed by smart contracts that run on a blockchain. Its rules are encoded in the contract, and decisions are made collectively by its members, often through voting with governance tokens. This structure provides transparency and automated enforcement without a central authority, perfectly matching the collective's requirements.

What is a 'seed phrase' (or recovery phrase) in crypto?

Answer: A series of words that can restore access to a crypto wallet

A seed phrase is a human-readable series of 12 or 24 words that serves as the master backup for a cryptocurrency wallet, allowing recovery of all associated keys.

What is a 'reentrancy attack' in the context of smart contracts?

Answer: A bug where a contract calls itself recursively to drain funds before state updates

In a reentrancy attack, a malicious contract repeatedly calls back into the vulnerable contract before its balance is updated, draining its ETH — famously exploited in The DAO hack.

In a mining pool, what does 'pool luck' refer to?

Answer: The ratio of actual blocks found to statistically expected blocks over a period, indicating variance in the pool's reward rate

Pool luck >100% means the pool found more blocks than expected; <100% means fewer — it measures how actual results compare to statistical expectation over time.

What is a Layer 2 (L2) solution in blockchain?

Answer: A protocol built on top of a base blockchain to improve scalability and reduce fees

Layer 2 solutions process transactions off the main chain and settle them on-chain, dramatically increasing throughput while inheriting base layer security.

What is the Ethereum Virtual Machine (EVM)?

Answer: The decentralized computation engine that executes smart contracts on Ethereum

The EVM is the runtime environment that executes smart contract bytecode across all Ethereum nodes in a deterministic way.

What is a Merkle tree used for in a blockchain block?

Answer: To efficiently verify transaction integrity

A Merkle tree hashes transactions in pairs up to a single root hash, allowing efficient and tamper-evident verification of any transaction in the block.

What is the meaning of UTXO?

Answer: Unspent Transaction Output

UTXO stands for Unspent Transaction Output, a fundamental concept in Bitcoin and other cryptocurrencies. A UTXO represents a discrete amount of cryptocurrency that has been received in a transaction but has not yet been spent. When you spend Bitcoin, you are essentially consuming one or more UTXOs and creating new UTXOs as change and payment to the recipient.

What is the primary purpose of an oracle in a smart contract ecosystem?

Answer: To supply real-world external data to on-chain contracts that cannot access it natively

Blockchains are deterministic and isolated, so oracles act as trusted data feeds that bring off-chain information (prices, weather, sports scores) onto the chain.

What does a high 'bid-ask spread' on a crypto exchange typically indicate?

Answer: Low liquidity and potentially higher transaction costs for traders

A wide bid-ask spread signals low liquidity, meaning it's harder to trade without incurring significant costs or moving the price.