10 Pillars/Features of Cryptocurrencies Flashcards

1
Q

What is decentralization in cryptocurrency?

A

Decentralization refers to the absence of a central authority or governing body, with the network maintained by distributed nodes or participants.

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2
Q

Why is decentralization important in cryptocurrency?

A

It increases security, reduces censorship risk, and makes the system more transparent.

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3
Q

Which cryptocurrency prioritizes decentralization as a core pillar?

A

Bitcoin (BTC) is a leading example of a decentralized cryptocurrency.

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4
Q

What is scalability in the context of cryptocurrency?

A

Scalability refers to the ability of a cryptocurrency network to handle more transactions efficiently without slowing down.

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5
Q

Why is scalability important for cryptocurrencies?

A

It allows the network to process more transactions quickly as usage increases, preventing delays and high fees.

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6
Q

Which cryptocurrency focuses on fast global transactions with low fees?

A

Ripple (XRP) is designed for fast, low-cost international payments.

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7
Q

What is the primary goal of cryptocurrencies like Solana (SOL) and Polygon (MATIC)?

A

These cryptocurrencies aim to improve scalability by offering fast transaction speeds and low fees.

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8
Q

What does ‘Proof of Work’ (PoW) mean?

A

Proof of Work is a consensus mechanism where miners solve complex puzzles to validate transactions and secure the network.

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9
Q

Which consensus mechanism consumes significant energy but provides strong security?

A

Proof of Work (PoW) used by Bitcoin and Ethereum (before Ethereum 2.0).

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10
Q

What is ‘Proof of Stake’ (PoS)?

A

Proof of Stake is a consensus mechanism where validators are chosen based on the amount of cryptocurrency they stake, reducing energy consumption.

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11
Q

Which consensus mechanism did Ethereum transition to with Ethereum 2.0?

A

Ethereum moved to Proof of Stake (PoS) for improved security and energy efficiency.

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12
Q

What is the importance of security in cryptocurrencies?

A

Security ensures the integrity of transactions, prevents fraud, and protects user assets from attacks.

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13
Q

Which cryptocurrency is known for its strong security through the Proof of Work mechanism?

A

Bitcoin (BTC) is known for its robust security due to its PoW consensus.

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14
Q

What is the focus of privacy-oriented cryptocurrencies?

A

Privacy coins focus on anonymizing transactions and protecting user identities from public scrutiny.

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15
Q

Which cryptocurrency is known for providing untraceable transactions?

A

Monero (XMR) is known for untraceable transactions using privacy-enhancing technology.

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16
Q

Which cryptocurrency offers optional privacy using zk-SNARKs?

A

Zcash (ZEC) allows users to choose between transparent or shielded transactions using zk-SNARKs.

17
Q

What is the purpose of the ‘PrivateSend’ feature in Dash (DASH)?

A

PrivateSend in Dash mixes transactions to obscure their origins, enhancing privacy.

18
Q

What is interoperability in the context of cryptocurrency?

A

Interoperability refers to the ability of different blockchain networks to interact and transfer data or assets between each other.

19
Q

Why is interoperability important in the blockchain space?

A

It allows for seamless collaboration and movement of assets across multiple blockchain platforms, breaking down silos.

20
Q

Which blockchain platform is specifically designed for interoperability?

A

Polkadot (DOT) is a blockchain focused on enabling interoperability between different blockchains.

21
Q

What is a smart contract?

A

A smart contract is a self-executing contract with terms written directly into code, which automatically triggers when conditions are met.

22
Q

Which blockchain is known for pioneering smart contracts?

A

Ethereum (ETH) pioneered the use of smart contracts, enabling decentralized applications (dApps).

23
Q

What does ‘tokenomics’ refer to in the context of cryptocurrency?

A

Tokenomics refers to the economic model behind a cryptocurrency, including token distribution, supply, and how tokens are created or destroyed.

24
Q

What is Bitcoin’s tokenomics model?

A

Bitcoin has a fixed supply of 21 million coins, contributing to its scarcity and store-of-value narrative.

25
Q

What is Ethereum’s tokenomics model after the introduction of EIP 1559?

A

Ethereum introduced a deflationary model with a burning mechanism in EIP 1559, reducing the total supply over time.

26
Q

What is the significance of governance in a cryptocurrency network?

A

Governance determines how decisions about protocol changes and upgrades are made, influencing the flexibility and adaptability of the network.

27
Q

Which cryptocurrency uses on-chain governance where token holders vote on protocol changes?

A

Tezos (XTZ) allows token holders to vote on proposed changes through its on-chain governance model.

28
Q

What is the consensus mechanism used by EOS and TRON that focuses on efficiency?

A

Delegated Proof of Stake (DPoS) is used by EOS and TRON for faster transaction processing with a smaller number of validators.

29
Q

Which cryptocurrency aims for carbon-negative blockchain operations with energy-efficient PoS?

A

Algorand (ALGO) is known for being carbon-negative with an energy-efficient Proof of Stake system.