10 Pillars/Features of Cryptocurrencies

Question 1

What is decentralization in cryptocurrency?

Answer 1

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

Question 2

Why is decentralization important in cryptocurrency?

Answer 2

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

Question 3

Which cryptocurrency prioritizes decentralization as a core pillar?

Answer 3

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

Question 4

What is scalability in the context of cryptocurrency?

Answer 4

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

Question 5

Why is scalability important for cryptocurrencies?

Answer 5

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

Question 6

Which cryptocurrency focuses on fast global transactions with low fees?

Answer 6

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

Question 7

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

Answer 7

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

Question 8

What does ‘Proof of Work’ (PoW) mean?

Answer 8

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

Question 9

Which consensus mechanism consumes significant energy but provides strong security?

Answer 9

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

Question 10

What is ‘Proof of Stake’ (PoS)?

Answer 10

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

Question 11

Which consensus mechanism did Ethereum transition to with Ethereum 2.0?

Answer 11

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

Question 12

What is the importance of security in cryptocurrencies?

Answer 12

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

Question 13

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

Answer 13

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

Question 14

What is the focus of privacy-oriented cryptocurrencies?

Answer 14

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

Question 15

Which cryptocurrency is known for providing untraceable transactions?

Answer 15

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

Question 16

Which cryptocurrency offers optional privacy using zk-SNARKs?

Answer 16

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

Question 17

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

Answer 17

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

Question 18

What is interoperability in the context of cryptocurrency?

Answer 18

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

Question 19

Why is interoperability important in the blockchain space?

Answer 19

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

Question 20

Which blockchain platform is specifically designed for interoperability?

Answer 20

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

Question 21

What is a smart contract?

Answer 21

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

Question 22

Which blockchain is known for pioneering smart contracts?

Answer 22

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

Question 23

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

Answer 23

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

Question 24

What is Bitcoin’s tokenomics model?

Answer 24

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

Question 25

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

Answer 25

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

Question 26

What is the significance of governance in a cryptocurrency network?

Answer 26

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

Question 27

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

Answer 27

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

Question 28

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

Answer 28

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

Question 29

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

Answer 29

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