Cryptocurrency - Technology Front End

Question 1

What does “dApps” stand for?

Answer 1

Decentralized Applications

Question 2

What are “Smart Contracts”?

Answer 2

“Smart Contracts are immutable (unchanging) programs that run on the decentralized Ethereum network.
Once Smart Contracts are deployed, they cannot be changed. ““Smart Contracts”” are needed to write **application code **on the Ethereum Network.”

Question 3

Smart Contracts are crucial to which Ethereum Technology?

Answer 3

The backend/program logic for “dApps”.

Question 4

What does “DeFi” stand for?

Answer 4

“Decentralized Finance (DeFi)
In Ethereum, you hold your private key to access your wallet. Users trust that the blockchain will execute the services offered.”

Question 5

What does “CeFi” stand for?

Answer 5

“Centralized Finance (CeFi)
In Ethereum, User’s trust that the businesses will:
1) Manage the Funds, &
2) Execute the Services”

Question 6

In the current state of “dApps”, are “dApps” mostly centralized or decentralized?

Answer 6

Today, most “dApps” are not fully decentralized. It is possible today to make fully decentralized dApps. In the future, more dApps will become more decentralized. This helps with Censorship-resiliency and a free web.

Question 7

What is a “Crypto Wallet”?

Answer 7

A “Crypto Wallet” is a device, program, or service that stores the Public Keys and/or Private Keys. Public and Private Keys are used to access your Cryptocurrencies.

Question 8

What are the 2 main types of “Crypto Wallets”?

Answer 8

“Hot Wallets (EX. Metamask) - Wallets that have direct connection to the internet. The wallet can be a phone app, online provider, or desktop software.
Cold Wallets (EX. Ledger) - Portable hardware that carry your crypto money. This option is more secure because you interact with the wallet offline. “

Question 9

How can you recover your Cryptocurrency if you lose your Physical Wallet?

Answer 9

You can recover it with the “Seed Phase”. Seed Phase is a list of 12 or 24 common words in a particular order. When you type those words, you will have access to the Crypto Wallet.

Question 10

What are “Custodial Wallets”?

Answer 10

“Centralized exchanges that hold control over your Wallet and Private Key. If these exchanges experience issues, the funds are at risk of getting frozen or lost.
Example of Centralized Exchanges are: Binance and Coinbase.”

Question 11

What are “Non-Custodial Wallets”?

Answer 11

””“Non-Custodial Wallets”” gives you full control over your Private Keys.
It is recommended to keep small amounts of funds on Central Exchanges for trading purposes. Use them as on-ramp/off-ramp for fiate currencies.”

Question 12

What does the saying “Not your keys, not your coins” mean?

Answer 12

If your Private Keys are managed by Centralized Exchanges, then the keys are not really yours. Your Cryptocurrency is truly yours when you have control of your Private Keys.

Question 13

In Blockchain, what does the term “Transaction” mean?

Answer 13

Transactions include data that will go to the next block. Transactions include: sender, recipient, value, data payload, and other data. Transactions represent the state transitions on the Blockchain.

Question 14

In Blockchain, what is the term used to verify “Transactions” on the network?

Answer 14

Consensus Mechanisms

Question 15

What are two types of consensus mechanisms used in Cryptocurrency?

Answer 15

“POW (Proof of Work) - First intruduced with Bitcoin. It uses mining as a Consensus Mechanism.
POS (Proof of Stake) - This is used by Ethereum. This uses staking as a Consensus Mechanism.”

Question 16

What “$ETH” currency units are mostly used for “Gas Fees”?

Answer 16

“gwei” and “ether”

Question 17

What are 2 types of accounts you can create through your “Crypto Wallet”?

Answer 17

“1) Externally Owned Acccounts (EOAs)
2) Contracts”

Question 18

What are “Externally owned Accounts (EOAs)”?

Answer 18

These are “Crypto Wallet” accounts where you will be given a “Private Key”. Private Keys will give you access to your funds and contracts in the Blockchain.

Question 19

In terms of “Crypto Wallets”, what is a “Contract Account”?

Answer 19

“A ““Contract Account”” are used for ““Smart Contracts”” and does not have a ““Private Key””. Contract accounts are owned/controlled by the logic in the ““Smart Contracts”” themselves.
““Contract Accounts”” cannot initiate a transaction in the Blockchain. However contracts can react to transactions.”

Question 20

After obtaining the “Private Keys”, what is needed to access the “Cryptocurrency” funds?

Answer 20

“Public Key
A ““Private Key”” will come with a ““Public Key””. The Private Key provides control over the account, the public key identifies the account to others.
Analogy: The Public Key is the Box number and Private Key is the key to that Box.”

Question 21

In Ethereum, what is used to represent the State Transitions?

Answer 21

””“Transactions””
Ethereum uses messages called ““Transactons”” to represent state transitions. These are signed messages originiated from an EOA and broadcasted on the Ethereum Network. Transactions is the only tech that can trigger a change of state on the Blockchain or cause a contract to execute.”

Question 22

What is needed for “Transactions” to be executed?

Answer 22

“Gas” is the fee to successfully conduct a “Transaction” on the Blockchain. In Bitcoin, Gas is used to pay minors for “Proof of Work (POW)”. In Ethereum, Gas is used to pay Stakers for “Proof-of-Stake (POS)”.

Question 23

In Ethereum, what is used to provide real-world/off-chain information to the Ethereum Network?

Answer 23

“Oracles
““Oracles”” are basically the bridges between ““Smart Contracts”” and the real world.
Examples of ““Oracles”” being used is to provide the Price of USD or results of sports games on the Ethereum Network.
Note - There is a risk of bad actors hacking oracles and providing false information for financial gain.”

Question 24

What term is used to transfer “Cryptocurrencies” or information from one “Blockchain” to another?

Answer 24

Bridging

Question 25

What "**dApps**" are used to **transfer** "**Cryptocurrencies**" or information from one "**Blockchain**" to **another**?

Answer 25

**Cross-chain Bridge dApps**

Question 26

What is another **term** used for "**Blockchains**?

Answer 26

**Chains**

Question 27

If you need to use a **new** **Blockchain**, why do you have to get "**Money**" on that "**Blockchain**" **first**?

Answer 27

To **pay** for the "**Gas Fees**".

Question 28

Do **large** "**Exchanges**" usually **allow** the **withdraw** from **several "Blockchains"**?

Answer 28

**Yes**

Question 29

What should you do if an "**Exchange**" **does not** provide **withdrawal** to a **particular "Blockchain"** you want into?

Answer 29

You will need to **send** the **Money** to **another Exchange**.

Question 30

Is it benificial to **withdraw** to a "**Blockcchain**" from a **large Exchange** (if it allows it)?

Answer 30

**Yes**

Question 31

How would you "**Bridge**" **Cryptocurrency** to another "**Blockchain**"?

Answer 31

By using a "**Bridge dApp**". You would cconnect your non-custodial wallet (Metamask) to the dApp. Then choose the "Blockchain" you would want to connect to.

Question 32

What types of **tokens** are available for "**Bridging**"?

Answer 32

"1) Only **certain larger cap tokens**. 2) Some ""**Blockchains**"" only accept a **certain Token/Coin** Note - Some Tokens are only available on one Blockchain which means ""Bridging"" is not an option. "

Question 33

Do "**Blockchains**" have their own "**Bridge dApp**"?

Answer 33

"Yes, the do this to o**nboard more people **onto **their ""Blockchain""**. Examples of this are: - **Binance Bridge** - **Arbitrum Bridge** - **Polygon Bridge**"

Question 34

What are 2 examples of "**Cross-chain Bridges**"?

Answer 34

"""- **Synapse** - **Portal** (formerly Wormhole)"""

Question 35

What is the **usually process** to "**Bridge**" **tokens** from one "Blockchain" to **another**?

Answer 35

"""**Bridging** from ""**Network Tokens** ($**ETH**, $**BNB**, $**SOL**, $**AVAX**)"" or from ""Stable Tokens ($USDC, $USDT, $BUSD)"" to the ""**Blockchain**"" **desired**. Note - Most Tokens are not liquid enough to be available on other ""Blockchains"""

Question 36

Do you have to pay "**Gas Fees**" each time you "**Bridge**" to a **new** "**Blockchain**"?

Answer 36

**Yes**

Question 37

Before "**Bridging**" into other **Tokens**, what should you take into **consideraton**?

Answer 37

You should consider the "**Gas Fees**" before "Bridging" into other Tokens.

Question 38

To **execute operations** on the "**Blockchain**", what is a "**Unit**" of **measurement** used to for the **amount** of **computational effort**?

Answer 38

**Gas**

Question 39

What **types** of **operations** on the "**Blockchain**" use "**Gas**" to execute?

Answer 39

**Transactions**

Question 40

In the "**Blockchain**", what **asset** of "**Gas**" is used to **stop** "**accidental/malicious** **infinite loops** or other **computational waste**"?

Answer 40

**Gas** sets a **limit** of **computational steps** that are used to **execute** a **code**.

Question 41

What **term** is used in "Cryptocurrency", to **describe** the **max amount** of "**Gas**: you are **willing** to **spend on a transaction**?

Answer 41

**Gas Limit**

Question 42

If the transaction fails because the "**Gas Limit**" provided was too small, would the transaction fail? Also would you get refunded for the "**Gas Fee**"?

Answer 42

The **transaction** will **fail** and you will **not get refunded** for the "**Gas Fee**" you had paid.

Question 43

In MetaMask (Crypto Wallet), are "**Gas Limits**"** already set** when you **input** a "**Transaction**"?

Answer 43

**Yes**, you can **also** go to "**advanced gas controls**" to **view** or **edit** the "**Gas Limits**".

Question 44

In MetaMask (Crypto Wallet), most of the Fee calculations are done for you. What **3 options** can you choose for **automated Fee calculations**?

Answer 44

"**Low**/**Market**/**Aggressive** The difference between the 3 is not so much. Aggressive will ensure the transactions will go through. "

Question 45

If a "**Hot Wallet**" **compromised** and you signed a transaction, could the transaction go to a **different one**?

Answer 45

Yes

Question 46

What is needed on the "**Hardware Wallet**", to make **transactions** on the "**Blockchain**"?

Answer 46

**Ethereum App** installed on the hardware device, and a "**Crypto Wallet**" **App** such as Metamask.

Question 47

If you have a "**Hardware Wallet**" that is used as a **Vault/Storage** for l**ots of coins** or **NFT's**, should you **install other dApps** on the Hardware Wallet?

Answer 47

For **Safety reasons**, **no**. There's a **risk** of that **Wallet** **getting stolen** with **other dApps** installed.

Question 48

Should you use your "**Seed Phase**" on **dApps** **other** than "**Metamask**"?

Answer 48

**No**, if you use it on a different application, there's a **chance** the **Seed Phase** is **exposed**.

Question 49

**Why** would you **swtich** "**RPC** (Remote Procedure Call) **Nodes**"?

Answer 49

Sometimes **RPC Nodes** will **go down** or **get congested**. Then you have the ability to switch to a new one. Also some RPC Nodes will have **privacy issues**.

Question 50

What are the **2 main mechanisms** for **swapping** **between coins**?

Answer 50

"1) **Order-book matching** 2) **AMM** (**Automated Market Maker**)"

Question 51

In terms of swapping between coins, what is the mechanism where **both parties** **agree** on the **swap exchange rate**?

Answer 51

"**Order-book Matching** **Both parties **have to **agree** on the **price** to be **executed**. This may not be efficient as you may not be able to find buyer/sellers."

Question 52

In terms of **swapping** **between** **coins**, what is the mechanism used where a "**Smart Contract" holds assets** in "**Liquidity Pools (LP)** sets the **trading price** based on **price curve**?

Answer 52

"**AMM** (**Automated Market Maker**) With this mechanism, you **don't need** a **counterpart** to **execute** the **trade**, you can **trade any time**."

Question 53

Where are **places** to **get information** on the **tokens** you are **looking for**?

Answer 53

"1) **Coingecko** 2) **CoinMarketCap** If the Tokens/Coins aren't availabe on those sites, then they maybe small coins/tokens. Use these two sites to **search** for **small Tokens/Coins**: a) **Dextools** b) **Dexscreener**"

Question 54

What type of **info** you should be **looking** for **before** **investing** into a **Token/Coin**?

Answer 54

"a) **Price** b) **MC (Market Cap)** c) **Liquidity** d) **FDV (Fully Diluted Valuation)** e) **Token Address**"