Wallets
What is a cryptocurrency wallet?
A cryptocurrency wallet is a software or hardware tool that allows users to store, send, and receive digital currencies like Bitcoin and Ethereum.
What does DeFi stand for in cryptocurrency?
DeFi stands for Decentralized Finance.
What is a blockchain in the context of cryptocurrencies?
A blockchain is a decentralized, distributed ledger that records and verifies transactions in a secure and transparent manner.
When was Bitcoin, the first cryptocurrency, created?
Bitcoin was created in 2009 by an individual or group of individuals using the pseudonym Satoshi Nakamoto.
Which cryptocurrency is often referred to as "digital gold," and why?
Bitcoin (BTC) is often called "digital gold" due to its store of value properties and scarcity, similar to physical gold.
What is a private key in the context of cryptocurrency wallets?
A private key is a secret code that provides access to and control over the cryptocurrencies stored in a wallet.
Name a popular platform used for creating and interacting with DeFi applications.
Ethereum
What role do miners play in the blockchain network?
Miners validate and add transactions to the blockchain and are rewarded with cryptocurrency for their efforts.
What was the initial purpose of creating Bitcoin?
The initial purpose of creating Bitcoin was to establish a decentralized, peer-to-peer digital currency that would enable trustless transactions without relying on traditional financial institutions.
What is the basic difference between a cryptocurrency coin and a token?
A cryptocurrency coin has its own independent blockchain, while a token operates on an existing blockchain.
What is the primary difference between a hot wallet and a cold wallet?
A hot wallet is online and used for frequent transactions, while a cold wallet is offline and typically used for long-term storage.
Explain what a decentralized exchange (DEX) is in the context of DeFi.
A decentralized exchange (DEX) is a platform that allows users to trade cryptocurrencies directly from their wallets without the need for intermediaries, providing greater control and privacy.
What is a smart contract in the context of blockchain?
A smart contract is a self-executing, programmable agreement that automatically enforces the terms and conditions of a contract when predefined conditions are met.
When did the concept of blockchain technology, which underlies cryptocurrencies, emerge?
The concept of blockchain technology emerged in the whitepaper published by Satoshi Nakamoto in October 2008, just before the launch of Bitcoin in 2009.
Discuss the concept of non-fungible tokens (NFTs) and their significance in the cryptocurrency space.
Non-fungible tokens are unique digital assets that represent ownership of a specific item, piece of art, or collectible. They have gained significance for their use in digital art, gaming, and unique ownership rights.
Explain the importance of backing up a cryptocurrency wallet.
Backing up a wallet, usually in the form of a mnemonic seed phrase, is crucial to recover access to funds in case the wallet is lost or damaged.
What is a liquidity pool in DeFi, and how does it function?
A liquidity pool is a smart contract that holds a reserve of cryptocurrencies. Users provide liquidity by depositing funds into the pool and, in return, earn a share of the transaction fees generated on the platform.
Discuss the scalability challenges faced by blockchain networks
Scalability challenges in blockchains include slow transaction speeds and high fees.
Explain the significance of the Silk Road in the history of cryptocurrency.
The Silk Road was an online marketplace on the dark web where various illegal goods and services were transacted, primarily using Bitcoin. It gained notoriety for demonstrating the potential use of cryptocurrencies in illicit activities.
What is a stablecoin, and why are they important in the cryptocurrency ecosystem? Provide examples of stablecoins.
Stablecoins are cryptocurrencies designed to maintain a stable value, often by being pegged to a traditional fiat currency like the US dollar. Examples include Tether (USDT), USD Coin (USDC), and DAI.
What risks are associated with using web-based (online) cryptocurrency wallets, and how can users mitigate them?
Online wallets are vulnerable to hacking and server failures. Users can mitigate risks by using strong passwords, enabling 2FA, and only using reputable, well-secured online wallet services.
What is the role of governance tokens in DeFi platforms, and how do they work?
Governance tokens give users the ability to participate in decision-making for the DeFi platform. Holders can vote on proposals for changes or updates, potentially shaping the future of the protocol.
Explain the concept of a 51% attack in blockchain and the potential consequences.
A 51% attack occurs when a single entity or group controls over 50% of the network's mining power, enabling them to manipulate transactions.
What was the purpose of Ethereum being created? And who created Ethereum?
Ethereum was proposed by Vitalik Buterin in late 2013 and was launched in 2015. It was developed to address limitations of Bitcoin, allowing for more complex smart contracts and decentralized applications (DApps).
Explain the concept of "wrapped tokens" in DeFi and why they are used.
Wrapped tokens are tokens on one blockchain that represent assets from another blockchain. They are used in DeFi to bring external assets into DeFi ecosystems, allowing users to access and trade them on the Ethereum blockchain, for instance.