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Cryptocurrency > Cryptocurrency - Technology Front End > Flashcards

Cryptocurrency - Technology Front End Flashcards

1
Q

What does “dApps” stand for?

A

Decentralized Applications

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2
Q

What are “Smart Contracts”?

A

“Smart Contracts are immutable (unchanging) programs that run on the decentralized Ethereum network.
Once Smart Contracts are deployed, they cannot be changed. ““Smart Contracts”” are needed to write **application code **on the Ethereum Network.”

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3
Q

Smart Contracts are crucial to which Ethereum Technology?

A

The backend/program logic for “dApps”.

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4
Q

What does “DeFi” stand for?

A

“Decentralized Finance (DeFi)
In Ethereum, you hold your private key to access your wallet. Users trust that the blockchain will execute the services offered.”

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5
Q

What does “CeFi” stand for?

A

“Centralized Finance (CeFi)
In Ethereum, User’s trust that the businesses will:
1) Manage the Funds, &
2) Execute the Services”

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6
Q

In the current state of “dApps”, are “dApps” mostly centralized or decentralized?

A

Today, most “dApps” are not fully decentralized. It is possible today to make fully decentralized dApps. In the future, more dApps will become more decentralized. This helps with Censorship-resiliency and a free web.

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7
Q

What is a “Crypto Wallet”?

A

A “Crypto Wallet” is a device, program, or service that stores the Public Keys and/or Private Keys. Public and Private Keys are used to access your Cryptocurrencies.

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8
Q

What are the 2 main types of “Crypto Wallets”?

A

“Hot Wallets (EX. Metamask) - Wallets that have direct connection to the internet. The wallet can be a phone app, online provider, or desktop software.
Cold Wallets (EX. Ledger) - Portable hardware that carry your crypto money. This option is more secure because you interact with the wallet offline. “

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9
Q

How can you recover your Cryptocurrency if you lose your Physical Wallet?

A

You can recover it with the “Seed Phase”. Seed Phase is a list of 12 or 24 common words in a particular order. When you type those words, you will have access to the Crypto Wallet.

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10
Q

What are “Custodial Wallets”?

A

“Centralized exchanges that hold control over your Wallet and Private Key. If these exchanges experience issues, the funds are at risk of getting frozen or lost.
Example of Centralized Exchanges are: Binance and Coinbase.”

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11
Q

What are “Non-Custodial Wallets”?

A

””“Non-Custodial Wallets”” gives you full control over your Private Keys.
It is recommended to keep small amounts of funds on Central Exchanges for trading purposes. Use them as on-ramp/off-ramp for fiate currencies.”

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12
Q

What does the saying “Not your keys, not your coins” mean?

A

If your Private Keys are managed by Centralized Exchanges, then the keys are not really yours. Your Cryptocurrency is truly yours when you have control of your Private Keys.

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13
Q

In Blockchain, what does the term “Transaction” mean?

A

Transactions include data that will go to the next block. Transactions include: sender, recipient, value, data payload, and other data. Transactions represent the state transitions on the Blockchain.

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14
Q

In Blockchain, what is the term used to verify “Transactions” on the network?

A

Consensus Mechanisms

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15
Q

What are two types of consensus mechanisms used in Cryptocurrency?

A

“POW (Proof of Work) - First intruduced with Bitcoin. It uses mining as a Consensus Mechanism.
POS (Proof of Stake) - This is used by Ethereum. This uses staking as a Consensus Mechanism.”

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16
Q

What “$ETH” currency units are mostly used for “Gas Fees”?

A

“gwei” and “ether”

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17
Q

What are 2 types of accounts you can create through your “Crypto Wallet”?

A

“1) Externally Owned Acccounts (EOAs)
2) Contracts”

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18
Q

What are “Externally owned Accounts (EOAs)”?

A

These are “Crypto Wallet” accounts where you will be given a “Private Key”. Private Keys will give you access to your funds and contracts in the Blockchain.

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19
Q

In terms of “Crypto Wallets”, what is a “Contract Account”?

A

“A ““Contract Account”” are used for ““Smart Contracts”” and does not have a ““Private Key””. Contract accounts are owned/controlled by the logic in the ““Smart Contracts”” themselves.
““Contract Accounts”” cannot initiate a transaction in the Blockchain. However contracts can react to transactions.”

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20
Q

After obtaining the “Private Keys”, what is needed to access the “Cryptocurrency” funds?

A

“Public Key
A ““Private Key”” will come with a ““Public Key””. The Private Key provides control over the account, the public key identifies the account to others.
Analogy: The Public Key is the Box number and Private Key is the key to that Box.”

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21
Q

In Ethereum, what is used to represent the State Transitions?

A

””“Transactions””
Ethereum uses messages called ““Transactons”” to represent state transitions. These are signed messages originiated from an EOA and broadcasted on the Ethereum Network. Transactions is the only tech that can trigger a change of state on the Blockchain or cause a contract to execute.”

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22
Q

What is needed for “Transactions” to be executed?

A

“Gas” is the fee to successfully conduct a “Transaction” on the Blockchain. In Bitcoin, Gas is used to pay minors for “Proof of Work (POW)”. In Ethereum, Gas is used to pay Stakers for “Proof-of-Stake (POS)”.

23
Q

In Ethereum, what is used to provide real-world/off-chain information to the Ethereum Network?

A

“Oracles
““Oracles”” are basically the bridges between ““Smart Contracts”” and the real world.
Examples of ““Oracles”” being used is to provide the Price of USD or results of sports games on the Ethereum Network.
Note - There is a risk of bad actors hacking oracles and providing false information for financial gain.”

24
Q

What term is used to transfer “Cryptocurrencies” or information from one “Blockchain” to another?

A

Bridging

25
Q

What “dApps” are used to transfer “Cryptocurrencies” or information from one “Blockchain” to another?

A

Cross-chain Bridge dApps

26
Q

What is another term used for “Blockchains?

A

Chains

27
Q

If you need to use a new Blockchain, why do you have to get “Money” on that “Blockchain” first?

A

To pay for the “Gas Fees”.

28
Q

Do large “Exchanges” usually allow the withdraw from several “Blockchains”?

A

Yes

29
Q

What should you do if an “Exchange” does not provide withdrawal to a particular “Blockchain” you want into?

A

You will need to send the Money to another Exchange.

30
Q

Is it benificial to withdraw to a “Blockcchain” from a large Exchange (if it allows it)?

A

Yes

31
Q

How would you “Bridge” Cryptocurrency to another “Blockchain”?

A

By using a “Bridge dApp”. You would cconnect your non-custodial wallet (Metamask) to the dApp. Then choose the “Blockchain” you would want to connect to.

32
Q

What types of tokens are available for “Bridging”?

A

“1) Only certain larger cap tokens.
2) Some ““Blockchains”” only accept a certain Token/Coin
Note - Some Tokens are only available on one Blockchain which means ““Bridging”” is not an option. “

33
Q

Do “Blockchains” have their own “Bridge dApp”?

A

“Yes, the do this to o**nboard more people **onto their ““Blockchain”“.
Examples of this are:
- Binance Bridge
- Arbitrum Bridge
- Polygon Bridge”

34
Q

What are 2 examples of “Cross-chain Bridges”?

A

”””- Synapse
- Portal (formerly Wormhole)”””

35
Q

What is the usually process to “Bridge” tokens from one “Blockchain” to another?

A

””“Bridging from ““Network Tokens ($ETH, $BNB, $SOL, $AVAX)”” or from ““Stable Tokens ($USDC, $USDT, $BUSD)”” to the ““Blockchain”” desired.
Note - Most Tokens are not liquid enough to be available on other ““Blockchains”””

36
Q

Do you have to pay “Gas Fees” each time you “Bridge” to a new “Blockchain”?

A

Yes

37
Q

Before “Bridging” into other Tokens, what should you take into consideraton?

A

You should consider the “Gas Fees” before “Bridging” into other Tokens.

38
Q

To execute operations on the “Blockchain”, what is a “Unit” of measurement used to for the amount of computational effort?

A

Gas

39
Q

What types of operations on the “Blockchain” use “Gas” to execute?

A

Transactions

40
Q

In the “Blockchain”, what asset of “Gas” is used to stop “accidental/malicious infinite loops or other computational waste”?

A

Gas sets a limit of computational steps that are used to execute a code.

41
Q

What term is used in “Cryptocurrency”, to describe the max amount of “Gas: you are willing to spend on a transaction?

A

Gas Limit

42
Q

If the transaction fails because the “Gas Limit” provided was too small, would the transaction fail? Also would you get refunded for the “Gas Fee”?

A

The transaction will fail and you will not get refunded for the “Gas Fee” you had paid.

43
Q

In MetaMask (Crypto Wallet), are “Gas Limits“** already set** when you input a “Transaction”?

A

Yes, you can also go to “advanced gas controls” to view or edit the “Gas Limits”.

44
Q

In MetaMask (Crypto Wallet), most of the Fee calculations are done for you. What 3 options can you choose for automated Fee calculations?

A

“Low/Market/Aggressive
The difference between the 3 is not so much. Aggressive will ensure the transactions will go through. “

45
Q

If a “Hot Wallet” compromised and you signed a transaction, could the transaction go to a different one?

A

Yes

46
Q

What is needed on the “Hardware Wallet”, to make transactions on the “Blockchain”?

A

Ethereum App installed on the hardware device, and a “Crypto Wallet” App such as Metamask.

47
Q

If you have a “Hardware Wallet” that is used as a Vault/Storage for lots of coins or NFT’s, should you install other dApps on the Hardware Wallet?

A

For Safety reasons, no. There’s a risk of that Wallet getting stolen with other dApps installed.

48
Q

Should you use your “Seed Phase” on dApps other than “Metamask”?

A

No, if you use it on a different application, there’s a chance the Seed Phase is exposed.

49
Q

Why would you swtich “RPC (Remote Procedure Call) Nodes”?

A

Sometimes RPC Nodes will go down or get congested. Then you have the ability to switch to a new one. Also some RPC Nodes will have privacy issues.

50
Q

What are the 2 main mechanisms for swapping between coins?

A

“1) Order-book matching
2) AMM (Automated Market Maker)”

51
Q

In terms of swapping between coins, what is the mechanism where both parties agree on the swap exchange rate?

A

“Order-book Matching
**Both parties **have to agree on the price to be executed. This may not be efficient as you may not be able to find buyer/sellers.”

52
Q

In terms of swapping between coins, what is the mechanism used where a “Smart Contract” holds assets in “Liquidity Pools (LP) sets the trading price based on price curve?

A

“AMM (Automated Market Maker)
With this mechanism, you don’t need a counterpart to execute the trade, you can trade any time.”

53
Q

Where are places to get information on the tokens you are looking for?

A

“1) Coingecko
2) CoinMarketCap
If the Tokens/Coins aren’t availabe on those sites, then they maybe small coins/tokens. Use these two sites to search for small Tokens/Coins:
a) Dextools
b) Dexscreener”

54
Q

What type of info you should be looking for before investing into a Token/Coin?

A

“a) Price
b) MC (Market Cap)
c) Liquidity
d) FDV (Fully Diluted Valuation)
e) Token Address”

Cryptocurrency (3 decks)

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