5.2 Digital Currency Cambridge IGCSE 0478

What is a key characteristic of digital currency?

• It exists only in electronic form and has no physical presence.

• It is only issued by banks and governments.

• It cannot be used for purchasing goods or services.

• It is illegal in all countries.

Which of the following is an example of digital currency?

• Bitcoin

• Debit card transactions

• Printed banknotes

• Gold bars

What is the main function of blockchain technology in digital currencies?

• It securely records and tracks all digital currency transactions.

• It converts digital currency into physical cash.

• It controls the interest rates of digital currencies.

• It acts as a central bank for cryptocurrencies.

Why is blockchain considered secure and transparent?

• Transactions recorded on the blockchain cannot be altered or deleted.

• The blockchain is stored on a single central server.

• Only one user has access to the blockchain ledger.

• Transactions on the blockchain are hidden from public view.

What is the structure of a blockchain?

• A series of linked records called blocks.

• A single document stored in a central database.

• A private database owned by a single company.

• A temporary record that is erased after transactions are complete.

How does blockchain prevent fraud in digital currency transactions?

• Transactions are verified and linked to previous records, preventing duplication or tampering.

• Digital currencies have built-in fraud detection software.

• Banks monitor and approve every transaction on the blockchain.

• The blockchain deletes fraudulent transactions automatically.

What happens when a new transaction is made using digital currency?

• The transaction is added to a new block and linked to previous blocks in the blockchain.

• The transaction is converted into physical money before being completed.

• The transaction is stored temporarily and deleted after 24 hours.

• The transaction requires approval from a central authority.

What makes digital currency different from traditional currency?

• Digital currency is purely electronic and does not have a physical form.

• Digital currency is always controlled by central banks.

• Digital currency can only be used in specific countries.

• Digital currency cannot be used to buy goods or services.

Why is blockchain often referred to as a 'distributed ledger'?

• It is stored across multiple computers rather than a central location.

• It is controlled by a single organization.

• It only records transactions temporarily.

• It is used only by banks for financial transactions.

Which of the following statements is true about cryptocurrencies like Bitcoin?

• They operate on decentralized blockchain networks.

• They are backed by physical assets such as gold.