IGCSE Computer Science Digital Currency

What is the definition of Digital Currency?

• A form of currency that is available only in digital or electronic form, and not in physical form.

• A type of currency that is only used in physical transactions.

• A traditional form of currency used in ancient times.

• A currency that is only used in barter systems.

Answer explanation

Digital currency is defined as a form of currency that exists only in digital or electronic form, distinguishing it from physical currencies. The correct choice accurately captures this definition.

The difference between physical money and digital money is:

• Physical money is tangible, while digital money is intangible.

• Physical money is intangible, while digital money is tangible.

• Both are tangible.

• Both are intangible.

Answer explanation

The correct choice highlights that physical money, like coins and bills, is tangible and can be physically touched, whereas digital money exists in electronic form and cannot be physically handled, making it intangible.

Digital currencies work by using a technology called blockchain, which is a decentralized ledger that records all transactions across a network. What is the technology used by digital currencies to record transactions?

• Blockchain

• Cryptocurrency

• Digital Wallet

• Smart Contract

Answer explanation

Digital currencies utilize blockchain technology to record transactions. Blockchain is a decentralized ledger that ensures all transactions are securely and transparently documented across the network.

Which of the following is a type of digital currency?

• Cryptocurrency

• Paper Money

• Gold

• Silver

Answer explanation

Cryptocurrency is a type of digital currency that uses cryptography for security, making it distinct from traditional forms of money like paper money, gold, or silver.

An example of a Central Bank Digital Currency (CBDC) is:

• Bitcoin

• Ethereum

• Digital Yuan

• Litecoin

Answer explanation

The Digital Yuan is a Central Bank Digital Currency (CBDC) issued by the People's Bank of China, while Bitcoin, Ethereum, and Litecoin are decentralized cryptocurrencies, not CBDCs.

Which of the following is an example of E-wallets & Mobile Payments?

• PayPal

• Bitcoin

• Ethereum

• USDT

Answer explanation

PayPal is a widely recognized E-wallet and mobile payment platform, allowing users to make transactions electronically. In contrast, Bitcoin, Ethereum, and USDT are cryptocurrencies, not E-wallets.

What are Stablecoins?

• A type of cryptocurrency designed to have a stable value

• A type of stock with fluctuating value

• A type of bond with fixed interest

• A type of commodity with variable price

Answer explanation

Stablecoins are a type of cryptocurrency specifically designed to maintain a stable value, often pegged to a reserve asset like the US dollar, unlike stocks, bonds, or commodities which can fluctuate in value.

What is Blockchain?

• A type of cryptocurrency

• A digital ledger technology

• A programming language

• A type of database management system

Answer explanation

Blockchain is best described as a digital ledger technology that securely records transactions across multiple computers, ensuring transparency and immutability, rather than being a cryptocurrency, programming language, or database management system.

How does blockchain secure transactions?

• By using cryptographic techniques to ensure data integrity and authenticity

• By storing data in a centralized database

• By allowing anyone to edit transaction records

• By relying on a single point of control

Answer explanation

Blockchain secures transactions by using cryptographic techniques, which ensure data integrity and authenticity. This prevents unauthorized changes and maintains trust in the transaction records.

What is the difference between Public and Private Blockchains?

• Public blockchains are decentralized and open to anyone, while private blockchains are restricted and require permission to join.

• Public blockchains are faster and more efficient than private blockchains.

• Public blockchains are used for financial transactions, while private blockchains are used for data storage.

• Public blockchains are more secure than private blockchains.

Answer explanation

The correct choice highlights that public blockchains are open and decentralized, allowing anyone to participate, whereas private blockchains are restricted and require permission, emphasizing their fundamental operational differences.