Q1 Which of the following is NOT a characteristic of traditional banking?

a) Own-branded ATMs
b) Dedicated account managers
c) 24/7 customer service without physical presence
d) Face-to-face customer service
Answer: c) 24/7 customer service without physical presence

Q2 What is one major advantage of traditional banking?

a) Higher monthly fees
b) Strict KYC/AML requirements
c) Personalized service
d) Limited financial products
Answer: c) Personalized service

Q3 What is a disadvantage of traditional banking?

a) Higher accessibility
b) Potentially outdated online banking systems
c) Instant account opening
d) Minimal bureaucracy
Answer: b) Potentially outdated online banking systems

Q4 What distinguishes a credit card from a debit card?

a) Credit cards allow spending up to a limit set by the lender
b) Debit cards allow spending beyond the account balance
c) Credit cards do not require repayments
d) Debit cards incur interest charges
Answer: a) Credit cards allow spending up to a limit set by the lender

Q5 Which of the following is NOT an issue with credit cards?

a) Card gets declined during payments
b) High annual fees
c) Works seamlessly in all countries
d) Late or missing repayments
Answer: c) Works seamlessly in all countries

Q5 What was the first online marketplace that launched in 1982?

a) Amazon
b) PayPal
c) Boston Computer Exchange
d) eBay
Answer: c) Boston Computer Exchange

Q6 Which cryptocurrency was the first successful decentralized one?

a) Ethereum
b) Bitcoin
c) Dogecoin
d) Litecoin
Answer: b) Bitcoin

Q7 What is an advantage of cryptocurrency transactions?

a) Centralized control
b) Secure transactions using cryptographic technologies
c) Government regulation
d) Fixed transaction fees
Answer: b) Secure transactions using cryptographic technologies

Q8 Which property ensures that a slight change in the original password results in
a significant and unpredictable change in the hash?
a) Collision resistance
b) Determinism
c) Diffusion (avalanche effect)
d) Non-reversibility
Answer: c) Diffusion (avalanche effect)

Q9 What is the main disadvantage of cryptographic hash functions?

a) Hashes cannot be stored securely
b) Rainbow tables can be used to crack them
c) Hash values are predictable
d) They do not provide security for passwords
Answer: b) Rainbow tables can be used to crack them

Q10 What component in blockchain ensures data integrity by linking to the previous
block?
a) Digital signature
b) Hash pointer
c) Public key
d) Private key
Answer: b) Hash pointer

Q11 What is the primary function of a Merkle Tree?

a) Encrypt financial transactions
b) Generate unique digital signatures
c) Efficiently verify data integrity
d) Create private keys for security
Answer: c) Efficiently verify data integrity

Q12 Which key is used to encrypt a digital signature?

a) Public key
b) Private key
c) Hash key
d) Symmetric key
Answer: b) Private key

Q13 Which of the following is NOT a feature of digital signatures?

a) Only the signer can sign their own signature
b) The signature can be copied to other documents
c) It is tied to a specific document
d) Everyone can verify the signature
Answer: b) The signature can be copied to other documents

Q14Which of the following is an example of a decentralized network?

a) Traditional banking system
b) Cryptocurrencies like Bitcoin
c) Government tax systems
d) Online shopping platforms
Answer: b) Cryptocurrencies like Bitcoin

Q15 What is a key disadvantage of centralized networks?

a) Higher scalability
b) Dependence on a single point of failure
c) Increased transparency
d) Reduced decision-making time
Answer: b) Dependence on a single point of failure

Q16 Why do decentralized networks have lower exchange fees?

a) They require fewer intermediaries
b) They use more advanced technology
c) They are regulated by financial institutions
d) They have fixed transaction costs
Answer: a) They require fewer intermediaries

Q17 What does consensus in distributed systems primarily aim to achieve?

a) Redundancy
b) Agreement among distributed processes
c) Load balancing
d) Speed optimization

Answer: b) Agreement among distributed processes

Q18 Which of the following is NOT a property of a consensus algorithm?

a) Termination
b) Agreement
c) Integrity
d) Redundancy

Answer: d) Redundancy

Q19 What property of consensus ensures that all correct processes agree on the same
value?
a) Integrity
b) Agreement
c) Termination
d) Performance

Answer: b) Agreement

Q20 The Byzantine Generals Problem is used to illustrate what type of fault?
a) Crash fault
b) Omission fault
c) Byzantine fault
d) Timing fault

Answer: c) Byzantine fault

Q21 What does Byzantine Fault Tolerance (BFT) ensure in a distributed system?
a) No node can fail
b) The system can tolerate some faulty or malicious nodes
c) Nodes cannot communicate with each other
d) The system has zero redundancy

Answer: b) The system can tolerate some faulty or malicious nodes

Q22 How are new bitcoins created?

a) By printing physical coins
b) Through mining
c) By government issuance
d) Through bank transactions

Answer: b) Through mining

Q23 Which of the following is NOT a type of Bitcoin client?

a) Full client
b) Lightweight client
c) Cloud client
d) Web client

Answer: c) Cloud client

Q24 What is the maximum number of bitcoins that will ever be created?
a) 1 million
b) 10 million
c) 21 million
d) Unlimited

Answer: c) 21 million

Q25What is the main goal of the Proof-of-Work (PoW) consensus mechanism?

a) To create an easy-to-crack verification system
b) To ensure trust through cooperation without intermediaries
c) To centralize blockchain governance
d) To eliminate the need for mining

Answer: b) To ensure trust through cooperation without intermediaries

Q26 What does a miner need to modify to meet the PoW difficulty threshold?
a) Hash rate
b) Nonce value
c) Block height
d) Merkle root

Answer: b) Nonce value

Q27 Which of the following is a common type of crypto theft method?

a) Cryptojacking
b) Cloud mining
c) Hardware failure
d) Inflation attack

Answer: a) Cryptojacking

Q28 How can users protect their cryptocurrency from info stealers?
a) By using hardware wallets
b) By sharing their private keys
c) By relying on centralized exchanges
d) By disabling ad-blockers

Answer: a) By using hardware wallets

Q29 What is the primary aim of social engineering schemes?

a) To mine cryptocurrency efficiently
b) To trick users into revealing sensitive information
c) To protect wallets from hackers
d) To enhance blockchain security

Answer: b) To trick users into revealing sensitive information

Q30 What is the recommended action to avoid losses in case of a centralized

exchange hack?
a) Store all funds in a single exchange
b) Use hot wallets exclusively
c) Diversify storage methods, including cold wallets
d) Avoid using exchanges altogether
Answer: c) Diversify storage methods, including cold wallets

Unit 2 MCQ

What is the primary requirement for a node to become a candidate validator in a

Proof-of-Stake (PoS) system?
a) High computational power
b) Staking a certain amount of cryptocurrency
c) Owning 51% of the network's coins
d) Solving complex mathematical puzzles
Answer: b) Staking a certain amount of cryptocurrency

In coin-age-based selection, what factor increases a node's chance of becoming a

validator?
a) The node's hashing power
b) The node's transaction history
c) The length of time coins have been staked
d) The validator's reputation
Answer: c) The length of time coins have been staked

What happens to a node’s coin age after it successfully forges a block in PoS?
a) It doubles
b) It resets to zero
c) It increases by one day
d) It remains unchanged
Answer: b) It resets to zero

What is the minimum staking period required to participate in the forging process
in PoS?
a) 10 days
b) 30 days
c) 60 days
d) 90 days
Answer: b) 30 days

What prevents a 51% attack in a PoS system?

a) The requirement to own 51% of the total cryptocurrency
b) The presence of mining pools
c) The need for solving cryptographic puzzles
d) Frequent network upgrades
Answer: a) The requirement to own 51% of the total cryptocurrency

What is a key requirement for becoming a validator in a PoA system?

a) High energy consumption
b) Anonymous identity
c) Formal identity validation
d) Staking a large number of coins
Answer: c) Formal identity validation

What is a major disadvantage of the Proof-of-Authority (PoA) consensus mechanism?

a) High energy consumption
b) Centralization due to pre-approved validators
c) Slow transaction speeds
d) Complex puzzle solving
Answer: b) Centralization due to pre-approved validators
Why is PoA considered more efficient than PoW?
a) It requires less computational power
b) It uses fewer validators
c) It relies on expensive mining hardware
d) It does not require transaction validation
Answer: a) It requires less computational power

What factor ensures the long-term commitment of validators in a PoA system?

a) Energy efficiency
b) Investment of reputation and money
c) Random selection process
d) Frequent updates to the protocol
Answer: b) Investment of reputation and money

Which cryptocurrency is known for using Proof of Activity (PoA)?

a) Bitcoin
b) Ethereum
c) Decred (D-Cred)
d) Litecoin
Answer: c) Decred (D-Cred)

Which consensus mechanisms are combined in Proof of Activity (PoA)?

a) Proof of Work and Proof of Stake
b) Proof of Stake and Proof of Authority
c) Proof of Work and Proof of Identity
d) Proof of Authority and Proof of Time
Answer: a) Proof of Work and Proof of Stake

In PoA, what role do validators play after miners submit their block headers?
a) They sign the block to confirm its validity
b) They solve cryptographic puzzles
c) They mine the next block
d) They add new transactions to the blockchain
Answer: a) They sign the block to confirm its validity

What is a significant limitation of PoA consensus?

a) High energy consumption during mining
b) Lack of transparency
c) Lower transaction throughput
d) Need for extensive staking periods
Answer: a) High energy consumption during mining

What is a key advantage of Proof-of-Stake (PoS) over Proof-of-Work (PoW)?

a) Requires no staking
b) More energy-efficient
c) Faster block generation
d) Lower initial investment
Answer: b) More energy-efficient

What is the "Nothing at Stake" problem in PoS?

a) Nodes have no risk in supporting multiple blockchain forks
b) Validators cannot stake their coins
c) Coins have no real-world value
d) The network becomes too slow
Answer: a) Nodes have no risk in supporting multiple blockchain forks
Which consensus algorithm provides the highest decentralization?
a) Proof of Stake
b) Proof of Authority
c) Proof of Work
d) Proof of Activity
Answer: c) Proof of Work

Why is the concept of "fixed existing coins" significant in PoS?

a) It prevents inflation in the network
b) It increases mining efficiency
c) It ensures faster transaction times
d) It simplifies the consensus process
Answer: a) It prevents inflation in the network

What happens if a validator in PoS forges a fraudulent block?

a) They lose their stake
b) They receive a penalty fee
c) They get banned permanently
d) They must wait longer for validation
Answer: a) They lose their stake