How Cryptocurrency Works and Differs from Traditional Financial Systems

The video tutorial explains how cryptocurrency differs from traditional financial systems, focusing on the role of intermediaries and the blockchain. It covers the mining process, its energy consumption, and the concept of proof of work. The tutorial also discusses cryptocurrency exchanges, wallet types, and security issues, using examples like Quadriga and Mt. Gox. The video concludes with a preview of the next lesson on blockchain technology.

What is one of the main roles of financial intermediaries in traditional banking systems?

• To eliminate transaction fees

• To facilitate trustworthy transactions

• To increase transaction speed

• To provide free financial advice

How does cryptocurrency differ from traditional financial systems in terms of transaction validation?

• It uses a central bank for validation

• It relies on a network of participants

• It uses paper-based ledgers

• It requires physical presence for validation

What is the primary purpose of the mining process in cryptocurrency?

• To verify transactions and create new digital currencies

• To decrease the energy consumption

• To increase the value of cryptocurrency

• To centralize the control of cryptocurrency

Which factor contributes significantly to the energy consumption in crypto mining?

• The use of renewable energy sources

• The need to cool down mining hardware

• The small size of mining operations

• The low number of miners

What is a unique feature of cryptocurrency exchanges compared to traditional financial institutions?

• They operate only during business hours

• They offer physical currency exchange

• They operate 24/7

• They require a minimum balance

What is the main difference between a hot wallet and a cold wallet?

• Cold wallets are used for frequent transactions

• Hot wallets are used for long-term storage

• Cold wallets are always connected to the internet

• Hot wallets are used for everyday transactions

What is a major security concern when using cryptocurrency exchanges?

• The blockchain technology itself

• The security of wallet keys

• The lack of transaction records

• The absence of customer support