CRYPTO-CURRENCY & BLOCKCHAIN TECHNOLOGY Flashcards
What is cryptocurrency?
A digital or virtual currency that utilizes blockchain technology for security and record-keeping.
Describe the key characteristics of blockchain technology.
Secure: Employs cryptography for protection.
Decentralized: No central control, operates on a distributed network.
Immutable: Records cannot be altered or deleted.
Transparent: Transactions are often visible to all network members.
How does blockchain support cryptocurrency?
Provides a ledger to record all cryptocurrency transactions.
Ensures security and prevents fraudulent transactions.
Maintains the decentralized nature of cryptocurrencies.
What factors led to the creation of cryptocurrencies?
Loss of faith in traditional currencies (fiat money) due to events like the 2007 Subprime Crisis.
Dissatisfaction with banks and their transaction fees.
Who is Satoshi Nakamoto?
The anonymous person (or group) that created Bitcoin, the first cryptocurrency.
When was Bitcoin introduced and what is its supply limit?
Bitcoin was launched in 2009 with a total supply limit of 21 million coins.
Name other popular cryptocurrencies besides Bitcoin.
Ethereum, Litecoin, Dogecoin, Ripple, Laxmicoin (and many others).
Can blockchain be used for things other than cryptocurrency?
Yes! Blockchain can be used to securely store various types of data, including:
Supply chain records
Medical records
Voting systems
Identity verification
Why were early cryptocurrencies created?
Anarchist groups disliked traditional banks/card companies (transaction fees, etc.) and lost faith in fiat money after the 2007 U.S. Subprime Crisis.
Who created Bitcoin and when?
Satoshi Nakamoto (anonymous) in 2009.
Besides cryptocurrency, what else can blockchain store?
Any type of data (e.g., contracts, medical records, supply chain information)
Why is blockchain considered “decentralized”?
Data is not controlled by a single entity, but distributed across a network of computers.
What is a cryptocurrency wallet?
A digital storage solution for your cryptocurrency, allowing you to hold, send, and receive digital assets.
What’s the difference between a hot wallet and a cold wallet?
Hot wallets are connected to the internet; cold wallets are offline.
Give an example of a hot wallet.
Software wallets (apps on your phone), exchange wallets, web-based wallets.
Give an example of a cold wallet.
Hardware wallets (like USB devices), paper wallets.
Why are hot wallets considered less secure?
Because they are connected to the internet, they are more vulnerable to hacks or cyberattacks.
What is the main security advantage of a cold wallet?
Since they’re offline, they are far less susceptible to hacking attempts, keeping your cryptocurrency safer.
Besides security, what’s a downside of cold wallets?
They are less convenient to use for frequent transactions.
I want the most secure way to store a large amount of cryptocurrency. What type of wallet is best?
A cold wallet.
I need to make occasional cryptocurrency transactions and prioritize ease of use. Should I use a hot or cold wallet?
A hot wallet would likely be a better fit.
What factors should I consider when deciding between a hot wallet and a cold wallet?
The amount of cryptocurrency you hold, how frequently you transact, and your priority level for security vs. convenience.
What happened to the price of Bitcoin between November 2021 and June 2022?
Bitcoin’s price fell dramatically from roughly $70,000 to $20,000.
This represents a loss of approximately 70%.
This decline was mirrored in the prices of many other cryptocurrencies.
Explain the term “Crypto Winter”.
“Crypto Winter” refers to an extended period of low prices and depressed market sentiment in the cryptocurrency market.
It is often triggered by significant price drops, like the one Bitcoin experienced.
Experts sometimes use this term to suggest that prices might remain low for a considerable length of time.
