Digital Currency

Question 1

Features of digital currency:

Answer 1

• Only exists electronically
• Can be a decentralised system
• Can be a centralised system
• Usually encrypted

Question 2

cryptography advantage

Answer 2

solves the problem in centralised banking systems (e.g security)

Question 3

How does cryptocurrency work

Answer 3

uses cryptography to maintain track of transactions

Question 4

process of blockchain network in digital currency (mark scheme)

Answer 4

A decentralised data base that acts as a digital ledger by tracking each transaction
It keeps a series of time-stamped records that cannot be altered

Question 5

Why is it hard to hack digital currency and makes it more secure than traditional currency?

Answer 5

Because of the blockchain network.

all transaction data is stored on ALL computers in the blockchain network

And data can’t be altered without the consent of ALL the network members.

Question 6

How blockchain works

Answer 6

Everytime a transaction takes place, a new block is created, with a new hash value

This hash value is unique to each block and includes a timestamp of the transaction, which cannot be altered

Block 1 is known as genesis block

All transaction data is stored in all the computers in the blockchain network

Question 7

What do block chains contain

Answer 7

EVERY BLOCK Contains:

1. name of sender and receiver, amount of money
2. Hash value: unique value generated by an algorithm
3. Previous hash value: hash value of previous block in the chain

Question 8

What is meant by digital currency

Answer 8

A currency that exists only in electronic form

Question 9

The process that uses a digital ledger to track the use of digital currency

Answer 9

Blockchain