Cryptocurrency Concepts and Risks

Cryptocurrency is digital money secured by cryptography, making it hard to counterfeit. It operates on blockchain technology, a decentralized ledger system. Cryptocurrencies like Bitcoin and Ethereum can be acquired through exchanges, payments, or mining. Their value is volatile, but they offer benefits like fast international transfers. However, they pose risks due to lack of regulation and potential for illegal use. Investing in cryptocurrencies requires careful research and risk assessment.

What is the primary purpose of cryptography in cryptocurrencies?

• To reduce transaction costs

• To enhance user anonymity

• To ensure security and prevent counterfeiting

• To increase transaction speed

Which of the following is NOT a well-known cryptocurrency?

• PayPal

• Ripple

• Ethereum

• Bitcoin

What technology underpins cryptocurrencies and ensures their decentralized nature?

• Blockchain

• Cloud computing

• Artificial Intelligence

• Quantum computing

What is a key feature of blockchain technology?

• Government regulation

• Fixed transaction fees

• Decentralized ledger

• Centralized control

How can one acquire cryptocurrencies?

• By mining them

• By receiving them as gifts

• All of the above

• By purchasing them on exchanges

Why is the value of cryptocurrencies considered volatile?

• They have fixed exchange rates

• They are regulated by central banks

• They are not backed by any government or physical commodity

• They are backed by gold

What is one potential benefit of using cryptocurrencies?

• Fast and inexpensive international transfers

• Slow transaction speeds

• High transaction fees

• Limited accessibility

What makes cryptocurrencies appealing for illegal activities?

• Their high value

• Their lack of regulation and anonymity

• Their physical form

• Their government backing

What is a significant risk associated with the digital nature of cryptocurrencies?

• They are always stable in value

• They are susceptible to hacking and technological issues

• They are immune to hacking

• They are backed by physical assets

What should you consider before investing in cryptocurrencies?

• Investing all your savings

• Ignoring market research

• Relying solely on government advice

• Understanding the risks involved