5.2

Question 1

What is digital currency?

Answer 1

Digital currency = an accepted form of payment to pay for goods or services.

It can be transferred between various accounts when carrying out transactions.


It has made it possible to bank online (ex. PayPal)

Digital currency has no physical form

Question 2

cryptocurrency definition

Answer 2

It is a digital currency where transactions are verified and maintained by a decentralized system using cryptography.

Question 3

cryptocurrency

Answer 3

Uses cryptography to track transactions

Created to address problems associated with centralized digital currency

Transactions are publicly available and can be tracked

Has no state control and all the rules are set by the cryptocurrency community itself

The cryptocurrency system works by being within a blockchain network which means it is much more secure.

Question 4

what areas is blockchain used in?

Answer 4

1. cryptocurrency (digital currency) exchanges
2. smart contracts
3. research
4. politics
5. education

Question 5

facts about blockchain (4 marks)

Answer 5

Blockchain is a decentralised database

All the transactions of networked members are stored on this database.

Blockchain consists of a number of interconnected computers but they are not connected to a central server

All transaction data is stored on all computers in the blockchain network.

Question 6

transactions in block-chaining

Answer 6

Whenever a new transaction takes place, all the networked computers get a copy of the transaction.

it cannot be changed without the consent of all the network members.

This effectively removes the risk of security issues such as hacking.

Question 7

what is a blockchain made up of?

Answer 7

Each block contains a..
cryptographic hash of the previous block, a timestamp, and transaction data.

Question 8

what happens when a chain of blocks is created?

Answer 8

a new hash value is created each time a new block is created. This hash value is unique to each block and includes a timestamp

Question 9

can you hack a blockchain?
(3 marks)

Answer 9

It’s almost impossible to hack into the blockchain since you’d need to attack every single block in the chain at the same time.

It only takes one block to break the link for any transaction to be terminated.

If a new network user is created, they get a copy of everything in the whole blockchain system