Welcome to your go-to guide for Transacting on the Blockchain quiz answers! Whether you’re working through practice quizzes to refine your understanding or preparing for graded quizzes to test your knowledge, this guide has you covered.
Covering all course modules, this resource will help you learn how blockchain transactions work, the role of digital wallets, public/private key encryption, and how digital assets are exchanged securely and transparently.
Transacting on the Blockchain Quiz Answers – Practice Quizzes for All Modules
Table of Contents
Transacting on the Blockchain Module 01 Quiz Answers
Cryptocurrencies, Protocol Tokens, and NFTs Quiz Answers
Q1. Which of the following is/are true about cryptocurrencies?
Correct Answer: Cryptocurrencies are primarily designed to serve as digital cash.
Explanation: While cryptocurrencies like Bitcoin were initially designed as digital cash, other use cases, such as powering DApps or representing tangible goods, are secondary applications of blockchain technology.
Q2. Which of the following is/are (an) example(s) of a protocol token?
Correct Answer: Ether
Explanation: Ether (ETH) is a protocol token that powers the Ethereum blockchain by facilitating transactions and incentivizing operations on the network.
Q3. What does it mean for an asset to be non-fungible?
Correct Answer: The asset is unique, irreplaceable, and non-interchangeable.
Explanation: Non-fungible assets, like NFTs, are unique and cannot be exchanged on a one-to-one basis, as they represent distinct items or properties on a blockchain.
Stablecoins, Securities Tokens, and Governance Tokens Quiz Answers
Q1. The DAI stablecoin, created by the Maker protocol, is an example of:
Correct Answer: A decentralized stablecoin
Explanation: DAI is a decentralized stablecoin that is pegged to the value of the US dollar and maintained by the MakerDAO system, which uses collateralized debt positions rather than a central authority.
Q2. Which of the following best describes the DeFi equivalent of an ETF?
Correct Answer: DeFi index fund
Explanation: A DeFi index fund is the decentralized equivalent of an ETF (Exchange-Traded Fund), offering diversified exposure to various assets within the blockchain ecosystem.
Q3. Which of the following is/are true about governance tokens?
Correct Answer: The holders of governance tokens have a vote in on-chain decision making.
Explanation: Governance tokens enable holders to participate in the governance of a decentralized protocol or DAO by voting on proposals and decisions related to the platform.
Exchange Tokens, Natural Asset Tokens, and CBDCs Quiz Answers
Q1. Which of the following is/are true about exchange tokens?
Correct Answer: Exchange tokens behave as both loyalty points and equity.
Explanation: Exchange tokens, such as Binance Coin (BNB), are often used as loyalty points by exchanges and can provide benefits like discounted trading fees. They can also act as a form of equity by granting holders additional privileges.
Q2. Which of the following is/are true about natural asset tokens?
Correct Answer: Natural asset tokens can represent assets such as gold, oil, or carbon offsets.
Explanation: Natural asset tokens are directly tied to real-world assets, representing commodities like gold, oil, or carbon credits, making them ideal for asset-backed tokenization.
Q3. Which of the following is/are (a) concern(s) related to CBDCs?
Correct Answer: Privacy; Financial deplatforming of dissenting individuals; Programmable money controlled by the government
Explanation: Central Bank Digital Currencies (CBDCs) raise concerns about privacy, potential misuse for financial censorship, and the implications of programmable money that could be controlled by governments.
Transacting on the Blockchain Module 02 Quiz Answers
What Are Smart Contracts? Quiz Answers
Q1. Who is the “father” of smart contracts?
Correct Answer: Nick Szabo
Explanation: Nick Szabo is widely regarded as the “father” of smart contracts for his pioneering work on the concept in the 1990s, long before they were implemented on blockchain platforms.
Q2. What is a smart contract?
Correct Answer: Software that mimics the logic of an agreement and automates the execution of transactions
Explanation: A smart contract is self-executing software that automatically enforces and executes terms of a contract when predefined conditions are met, typically on a blockchain network.
Q3. What is/are the benefit(s) of smart contracts? Select all that apply
Correct Answer:
- Smart contracts reduce transaction costs by eliminating the need for intermediaries.
- Smart contracts help enforce the terms of an agreement by automating performance.
- Smart contracts use a control structure that enables parties to predict the contract’s outcome at any point in time.
Explanation: Smart contracts reduce transaction costs by removing intermediaries, automate contract performance, and provide predictability and transparency through control structures built into the code.
Smart Contract Phases Quiz Answers
Q1. Consider a vending machine that dispenses drinks. Which of the following statements represents the search phase of the deal cycle?
Correct Answer: The owner of the vending machine places it in a high-traffic area where buyers will easily find it
Explanation: The search phase of the deal cycle involves making the product visible and accessible to potential customers, as seen when the vending machine is placed in a high-traffic area for easier discovery.
Q2. Using the same vending machine scenario, which of the following statements represents the performance phase of the deal cycle?
Correct Answer: IF sufficient payment is received, THEN the vending machine will dispense the correct drink
Explanation: The performance phase involves executing the transaction or service, where the vending machine performs its function of dispensing a drink once payment conditions are met.
Q3. Which of the following is/are an example(s) of post-performance incentivization?
Correct Answer:
- A consumer’s rating of a business
- A reputation score on a social network
Explanation: Post-performance incentivization involves motivating consumers or businesses after the transaction, such as through ratings or reputation scores, which can influence future behavior.
Smart vs. Traditional Contracts Quiz Answers
Q1. Dry code refers to:
Correct Answer: Software code that is interpreted by a computer
Explanation: Dry code refers to programming code that is written efficiently and clearly, typically interpreted or executed by a computer.
Q2. In contrast to traditional legal contracts, smart contracts running on a blockchain are:
Correct Answer: Automated
Explanation: Smart contracts are automated agreements executed directly by computer code on a blockchain, eliminating the need for intermediaries to enforce the terms.
Smart Contracts and Law Quiz Answers
Q1. What is the relationship between smart contracts and the traditional legal system?
Correct Answer: Smart contracts and traditional contracts are complementary, and work best in tandem
Explanation: Smart contracts and traditional legal contracts can work together. Smart contracts automate certain contract terms, but traditional contracts provide the legal framework and recourse in case of disputes.
Q2. How does performance verification code assist in resolving smart contract breaches?
Correct Answer: It detects a failure in execution and will seize the on-chain collateral of whoever breached the contract as payment for damages
Explanation: Performance verification code in smart contracts ensures that terms are fulfilled. If a breach occurs, the code can automatically trigger actions like seizing collateral to cover damages.
Smart Contracts Graded Quiz Answers
Q1. A smart contract is:
Correct Answer: Software that mimics the logic of an agreement and automates the execution of transactions
Explanation: A smart contract is a self-executing contract with the terms of the agreement directly written into code that automates and enforces transactions on a blockchain.
Q2. What is/are the benefit(s) of using a smart contract?
Correct Answer: All of the above
Explanation: Smart contracts reduce mental transaction costs, increase predictability and risk management, and provide security over users’ business dealings by automating processes.
Q3. A key feature of a smart contract is:
Correct Answer: It cannot be seized, stopped, or redirected to another address once it has been set in motion on a blockchain
Explanation: Smart contracts, once deployed on a blockchain, are immutable and self-executing, making them resistant to tampering or interruption.
Q4. What happens during the performance phase of a smart contract deal cycle?
Correct Answer: The smart contract manages the collateral to affect an outcome
Explanation: During the performance phase, the smart contract ensures that conditions are met and executes the agreed terms, such as managing collateral and affecting outcomes automatically.
Q5. Wet code refers to:
Correct Answer: Legal language that is interpreted by a human
Explanation: Wet code refers to human-readable legal language, as opposed to dry code, which is executed by computers.
Q6. How does a smart contract differ from a traditional legal contract?
Correct Answer: A smart contract is executed by impartial technology (e.g. sensor-guided effectors), whereas a traditional contract contains rules and conditions that are subject to human judgment
Explanation: Smart contracts automate the execution of agreements using technology, while traditional contracts rely on human enforcement and interpretation.
Q7. How do smart contracts fit within the traditional legal system?
Correct Answer: All of the above
Explanation: Smart contracts can complement traditional legal contracts by automating certain functions while still benefiting from the traditional legal framework.
Q8. Traditional contracts tend to be biased toward their jurisdiction of origin. Conversely, a smart contract on a blockchain:
Correct Answer: Applies the same rules and logic everywhere around the globe
Explanation: A smart contract on a blockchain operates globally under the same set of rules, ensuring consistency and removing jurisdictional biases.
Q9. Which of the following describes a potential application of smart contracts in the insurance industry?
Correct Answer: A smart contract could automate the payout of a parametric contract following a measurable, insured event.
Explanation: Smart contracts can automate insurance payouts based on predefined criteria (e.g., a measurable event like weather conditions), simplifying and speeding up claims processing.
Q10. A key strategy for effectively implementing smart contracts in a business is:
Correct Answer: To hire lawyers who know computer science and software engineers who know law
Explanation: Effective smart contract implementation requires interdisciplinary expertise, with legal and technical knowledge to ensure that contracts are properly designed, coded, and legally enforceable.
Transacting on the Blockchain Module 03 Quiz Answers
Identity Graded Quiz Answers
Q1. Which of the following best describes an identifier?
Correct Answer: An identifier is what a centralized system uses to grant us access to their services
Explanation: An identifier is typically used in centralized systems to distinguish and grant access to individuals, though it is not necessarily inalienable or inherently connected to a person.
Q2. What is/are the problem(s) with using a birth certificate as an overarching record of existence?
Correct Answer: All of the above
Explanation: Birth certificates are not universally issued, leading to challenges in access to basic services and rights. This can leave individuals without essential documentation needed for education, healthcare, inheritance, voting, and other rights.
Q3. India developed a digital ID for every resident called the Aadhaar. What was problematic about its implementation?
Correct Answer: All of the Aadhaar’s demographic and biometric data was stored in a centralized database, which was hacked.
Explanation: The Aadhaar system stored sensitive demographic and biometric data in a centralized database, which was vulnerable to security breaches, raising concerns about privacy and data security.
Q4. What is/are the problem(s) with storing identifiers in a centralized system?
Correct Answer: All of the above
Explanation: Centralized systems are vulnerable to administrative control, data portability issues, and security risks such as identity theft or hacks, placing the burden of recovery on the user.
Q5. Which of the following should not apply to the design of an “identity commons?”
Correct Answer: It must create an inseparable link between data rights and the actual data.
Explanation: An “identity commons” should ideally separate data rights from the data itself to allow for more user control and privacy, rather than linking them inseparably.
Q6. What does it mean for an identity system to be “self-sovereign?”
Correct Answer: That the data you create, and all related rights of privacy, are under your individual control
Explanation: A self-sovereign identity system gives individuals full control over their personal information, including privacy and rights, without relying on third parties.
Q7. Which of the following describes a protocol for verifying that x is true, without knowing what x is or who it involves?
Correct Answer: Zero-knowledge proof
Explanation: A zero-knowledge proof allows one party to prove the truth of a statement without revealing the actual statement or any other information.
Q8. What is/are the function(s) of a proxy contract in a blockchain-based identity system?
Correct Answer: All of the above
Explanation: A proxy contract in a blockchain-based identity system facilitates verification, interaction with other contracts, and permission granting for data access, ensuring security and flexibility in the system.
Q9. What is/are the function(s) of a controller contract in a blockchain-based identity system?
Correct Answer: All of the above
Explanation: A controller contract manages identity recovery, enables privacy-preserving computations, and facilitates private information retrieval, supporting the security and privacy of user data.
Q10. Which of the following is a proposed standard for blockchain-based identity on the Ethereum network, issued by Fabian Vogelsteller?
Correct Answer: ERC 725
Explanation: ERC 725 is a proposed Ethereum standard for decentralized identity management, allowing for secure and interoperable digital identities on the Ethereum blockchain.
Transacting on the Blockchain Module 04 Quiz Answers
Rethinking Finance Graded Quiz Answers
Q1. Today’s global financial services industry is:
Correct Answer: All of the above
Explanation: The global financial services industry is considered antiquated, exclusive, and centralized, with outdated technology, lack of access for many, and vulnerability to data breaches and failures.
Q2. Blockchain technology promises to mitigate several forms of financial risk. The most significant is _____________, which blockchain could eliminate completely.
Correct Answer: counterparty risk
Explanation: Blockchain technology eliminates counterparty risk by ensuring trustless transactions between parties, with verifiable and secure transactions directly recorded on the blockchain.
Q3. In today’s financial services industry, remittances take 3-7 days to settle, stock trades take 2-3 days to settle, and bank loan trades take an average of 23 days to settle. How long does it take a transaction to settle on the Bitcoin Lightning Network?
Correct Answer: milliseconds to seconds
Explanation: The Bitcoin Lightning Network enables near-instantaneous settlement, with transactions typically taking milliseconds to seconds to complete.
Q4. What impact will blockchain have on financial lending?
Correct Answer: Consumers, entrepreneurs, and the unbanked will be able to access loans directly from peers
Explanation: Blockchain will enable decentralized lending platforms, allowing individuals to access loans from peers, bypassing traditional financial institutions and their intermediaries.
Q5. How will blockchain disrupt global trade (i.e. exchanging value)?
Correct Answer: It will reduce settlement times on transactions.
Explanation: Blockchain will enable faster and more secure transactions, reducing settlement times for global trade and making it more efficient for everyone, including the unbanked and underbanked.
Q6. How will blockchain affect financial investing?
Correct Answer: It will enable new models of peer-to-peer financing through token generation events or Initial Coin Offerings (ICOs).
Explanation: Blockchain enables innovative financing models like ICOs and token generation events, disrupting traditional financial investment methods.
Q7. This system of accounting was invented in 15th century Italy by Luca Pacioli, which gave rise to modern accounting practices.
Correct Answer: double-entry accounting
Explanation: Double-entry accounting, developed by Luca Pacioli, revolutionized accounting by requiring every transaction to be recorded in at least two accounts, ensuring accuracy.
Q8. Why are traditional accounting practices ill-suited to the modern era?
Correct Answer: All of the above
Explanation: Traditional accounting practices are vulnerable to human error, rely on management integrity, and struggle to accommodate new business models like microtransactions.
Q9. This alternative framework for accounting, originally conceived by Yuji Ijiri, has been reappropriated by some to mean the presence of a shared, cryptographically sealed receipt of transactions on a blockchain.
Correct Answer: triple-entry accounting
Explanation: Triple-entry accounting, as reimagined in blockchain systems, adds a third, cryptographically sealed entry for transparency and security in transactions.
Q10. What is/are the implication(s) of a “World Wide Ledger” for accounting?
Correct Answer: All of the above
Explanation: A World Wide Ledger would streamline compliance, provide real-time access for regulators, and potentially eliminate the need for audit firms by ensuring transparent, real-time financial records.
Sources: Transacting on the Blockchain
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