Assessment Quiz OLEO1207-OLET1208 Cryptocurrency Markets and Investments PDF

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Assessment Quiz OLEO1207-OLET1208 Cryptocurrency Markets and Investments...

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22/11/2021, 12:13

Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Assessment Quiz Due No due date

Points 25

Questions 25

Time Limit None

Allowed Attempts Unlimited

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Time

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Attempt 1

29 minutes

23.5 out of 25

 Correct answers are hidden. Score for this attempt: 23.5 out of 25 Submitted Nov 22 at 12:12 This attempt took 29 minutes.

Question 1

1 / 1 pts

What is the name of the mysterious inventor of Bitcoin?

Satoshi Nakamoto

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Well done.

Question 2

1 / 1 pts

Blockchains enable trustless, peer-to-peer payments. What does this mean?

Users of blockchain technology don’t need to trust any intermediary

Question 3 https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Please select all valid forms of income for Bitcoin miners.

New Bitcoins mined in the form of block rewards

A block reward refers to the number of bitcoins you get if you successfully mine a block of the currency. The amount of the reward halves every 210,000 blocks, or roughly every four years. The amount is expected to hit zero around 2140.

Transaction fees from Bitcoin users

The fee goes to the miner who mines the block that includes your transaction. The fee is based on the size (in bytes) of the transaction and the age of its inputs (how long ago the coins spent were received). Transactions get big if they have to "pull in" a lot of outputs from previous transactions and that raises the fee. So if you got a lot of small payments and then try to make a large payment, the transaction will be expensive because it needs to gather all those small payments.

Great work.

Question 4

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Which hashing algorithm does the Bitcoin blockchain use?

SHA-256

Cryptography or hash algorithms are what keep Bitcoin’s blockchain secure. A hash algorithm takes data of any arbitrary size (numbers, alphabets, media files) and transforms it into a fixed alphanumeric string. The fixed bit size can vary (like 64-bit or 128-bit or 256-bit) depending on what hash function is being used. Bitcoin’s blockchain uses SHA-256 (Secure Hash Algorithm) which was developed by the National Security Agency (NSA) in 2001. The hash algorithm has certain unique properties - namely, it produces a unique output (or hash); and it is a one-way function meaning that it can be treated as a 'digital fingerprint' of the data processed through the hash function.

That's right. Try again.

Question 5 https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Which of the following statements is true?

Cryptocurrencies are not issued or backed by any kind of bank

Well done.

Great work.

Question 6

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Fill in the blank Most cryptocurrencies are backed by __________ technology. https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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blockchain

Well done.

Well done.

Question 7

1 / 1 pts

Fill in the blank A coin that tracks the value of a real-world financial asset or basket of financial assets (like gold, currencies etc.) is known as a ________.

stablecoin

Stablecoins are cryptocurrencies that can afford users the stability that they have with fiat currency, or in other words, they have a fixed price that is usually measured against another fiat currency, for example, many stablecoins are pegged against the US dollar. Tether is one of the leading stablecoin cryptocurrencies. It is said to be pegged to and backed by the U.S. dollar.

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Good work.

Question 8

1 / 1 pts

What are the two crucial pieces of information that a wallet user needs to have called?

Public key and private key

A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other cryptocurrency, you will need to have a digital wallet. Your public key is used to receive funds. It identifies your account on the network. It can be search in the ledger. Your private key is only used to sign transactions and prove you own the related public key. This should never be shared.

Good work.

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Question 9

1 / 1 pts

Fill in the blank To send coins to your friend’s digital wallet, you need to know their wallet’s ________ key.

public

Public key cryptography (PKC) is an encryption technique that uses a paired public and private key (or asymmetric key) algorithm for secure data communication. A message sender uses a recipient's public key to encrypt a message. To decrypt the sender's message, only the recipient's private key may be used.

Great.

Question 10

1 / 1 pts

What is the crucial difference between Ripple and Bitcoin?

The Ripple blockchain doesn’t need miners

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

Bitcoin was developed as a digital currency with the aim of paying for services and goods. Ripple, in turn, was created for banks and payment networks as a payment settlement, money transfer system, and currency exchange. The main idea of Ripple was to create a system of direct asset transfers in real-time which would be cheaper, more transparent, and secure than the existing payment methods, such as SWIFT payments. Ripple, though, is developed by an official company with set goals and investors called the Ripple company, founded in 2012. The Ripple network is managed by a range of independent servers comparing their transaction records constantly. A new ledger of Ripple is created each second and as such it is not designed to be mined at all.

Great work.

ncorrect

Question 11

0 / 1 pts

Fill in the blank Contracts designed to execute automatically based on pre-specified rules are known as ________. https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

smart contract

Try again.

Question 12

1 / 1 pts

Which blockchain is designed mainly to support smart contracts?

Ethereum blockchain

Ethereum is a blockchain based open software platform capable of giving developers the ability to build and deploy a decentralized application. Before Ethereum, Blockchain applications were only able to perform only one set of operations. Ethereum, on the other hand, allows people to run different programs on its Virtual Machine (EVM), irrespective of the language, as long as there is enough memory and time. Ethereum makes it possible to develop up to thousands of applications on one platform instead of having to build a completely new application for each. With Ethereum you can decentralize any number of centralized services (think regulatory compliance, voting systems, title registries etc.)

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Well done.

Question 13

1 / 1 pts

What is the major difference between tokens and cryptocurrencies?

Tokens are not backed by their own blockchain

Cryptocurrencies, which are embodied by the likes of Bitcoin, Litecoin, Zcash, Dash and Ripple come in the form of altcoins and all possess their own blockchains and operate on independent platforms. The fundamental premise behind a coin is that it possesses its own value, much like traditional currencies outside of the digital spectrum. They are, by their own right in the digital sense, their own currency and there are thousands of them. For instance, if you take a look at Bitcoin in its entirety, it can be broken down as a distributed ledger with it’s own open-source blockchain, that serves best as a decentralised, digital currency. In essence it becomes as real as a tangible coin – but in the cryptic sense. On the other hand a Token is actually issued by the companies themselves and serve more like a stock or a hold and exist as a secondary asset in the https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

original company itself. Though it seems straightforward enough, in order to understand the premise of a token it is necessary to also have a grip of the concept of an Initial Coin Offering (ICO) the two of which come hand in hand within the process. An Initial Coin Offering is essentially the announcement of a new currency’s creation, and a company’s bid to raise funds for a project by attracting investors and providing them with something of value in return. A Token is given to investors in return for raising funds – essentially a method of crowdfunding – for the ICO which can then be maintained, or alternatively, it is possible to access a currency exchange and then sell the tokens for coins and other currencies. So in summary, tokens are not a currency. You don’t need to create a Blockchain to issue tokens, which is a must-have for a cryptocurrency, but you use an existing one (usually Ethereum, which was originally created as a platform for smart contracts and evolved to be a currency). A coin is a money equivalent, something that defines value and serves as a value transfer. A token is a symbol of a contract, the value does not depend on mining, gold price or any dynamic market criteria.

Good work.

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Question 14

1 / 1 pts

What is the one major benefit of decentralised apps over centralised apps?

Decentralised apps increase the number of points that need to fail for funds or data to be stolen completely

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

In order to understand the meaning of this definition better, let’s first try to understand how traditional web applications function and how are DApps any different? In traditional web apps, two important elements that make the system usable are the front end and the back end. These elements communicate with each other in the form of coding messages through the HTTP protocol. There are multiple issues involved with such applications when compared with DApps. First of all, such application servers are hosted on a hosting service that uses a centralized architecture which leads to a single point of failure in case of a malicious attack. Moreover, taking down an application through a centralized server only requires the hacker to interrupt with the hosting service. When we rely on centralized servers, the data is more susceptible to attacks. When it comes to DApps, there are again two main elements involved. While the front end remains the same as traditional applications, the backend is formed in the form of an Ethereum blockchain. The communication between the front-end and backend happens in the same form as in the traditional app and the end user won’t be able to distinguish between both. In the case of using a DApp, it is very difficult to bring any application down as it requires to take down all the distributed hosting nodes which are practically not possible. Taking an example for the same standard popular web applications like Facebook, Twitter and Instagram currently function on a centralized server model. The data of these applications is controlled by singular authorities and can be manipulated or changed according to need. Meaning that though there are millions of front-end users of these applications, the backend is still controlled by the individual organization.

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Very good.

Question 15

1 / 1 pts

What right does a utility token offer the holder?

Utility tokens can be used to pay for services on dApps

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Utility tokens provide their holders with future access to the startup's services or products. It is not issued in the form of an investment asset. By issuing utility tokens, an ICO startup can offer discounts or sell pre-order coupons for products or services that are still under development. This is done in a similar fashion to some retailers which permit pre-orders for ASIC miners that might not be actually available on the market for a few months. For example, Sirin Labs, a start-up that organized one of the most successful ICOs in 2017 by raising more than $150 million, allowed holders of their SRN token to pre-order the company's blockchainbased smartphone, FINNEY, at a discounted price.

Nice work.

Question 16

1 / 1 pts

What is the name of the token issued by the Perth Mint?

Perth Mint Gold Token

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

The Perth Mint Gold Token (PMGT) is the first digital gold token on a public blockchain ultimately backed by government guaranteed gold. Each digital token is issued by InfiniGold and backed by physical gold held by The Perth Mint.

Correct.

Partial

Question 17

0.5 / 1 pts

Which feature(s) makes dApps decentralised?

Data is stored in several small servers rather than one large server

All records of the application’s operation must be stored on a public and decentralized blockchain to avoid pitfalls of centralization (i.e. single point failure).

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Several entities can make changes to the app rather than just one central entity

No. Try again.

The app is used by several small entities rather than just one large entity

Try again.

Question 18

1 / 1 pts

Under which scenario is it more appropriate to build a token instead of a cryptocurrency?

You want to a blockchain-backed marketplace for used items like Gumtree

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Question 19

1 / 1 pts

Under which of the following scenarios does it make most sense to buy Bitcoin to diversify your share portfolio?

If Bitcoin prices move in the opposite direction and with the same magnitude as share prices

If the returns on the assets in your portfolio are positively correlated (i.e. they move in the same direction), then the benefit of adding additional assets in the same mould on your risk / return payout is negligible. Bitcoin can potentially improve the return / risk payoff by offering diversification.

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Good work.

Question 20

1 / 1 pts

Fill in the blank ___________ is the difference between the ask price and the bid price. It is used as a liquidity measure.

Spread

Correct. If i was to simultaneously purchase and sell a security, then the cost i would incur as a trader is the bid-ask spread ("spread"). It is seen as a liquidity measure - i.e. less liquid securities have higher spreads (transaction costs).

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Super.

Question 21

1 / 1 pts

What is one mechanism exchanges can use to prevent hacks?

Store their client’s funds in cold wallets

This is the best form of security for investors / traders.

Good work.

Question 22

1 / 1 pts

You sell 1 BTC on Independent Reserve. When will a transaction appear on the blockchain? https://canvas.sydney.edu.au/courses/31979/quizzes/130448

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Assessment Quiz : OLEO1207-OLET1208 Cryptocurrency Markets and Investments

When you transfer 1 BTC from your wallet to your exchange account

Good work.

Question 23

1 / 1 pts

You are trading at a cryptocurrency exchange and you that the best buy limit order is for 10 BTC and has a price of $10,000. You are happy to sell your 5 BTC at this price so you immediately submit a sell market order. However, after your order is executed, you find that it was executed at a price of $9,500 and not $10,000. What type of manipulation have you fallen victim to?

Spoofing

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