DIGITAL CURRENCY FINAL STRETCH

Question 1

What is digital currency?

Answer 1

Digital currency is one that only exists in digital form

It is stored in digital wallets or accounts, with no physical bank notes or coins.

Question 2

How can digital currency be used?

Answer 2

It can be exchanged online to pay for goods and services or for transferring money internationally

This highlights its utility in modern transactions.

Question 3

What is a key characteristic of digital currency compared to traditional currencies?

Answer 3

Digital currency is not controlled or monitored by central banks or government (decentralised)

This decentralization can lead to increased volatility.

Question 4

What does the volatility of digital currency imply?

Answer 4

The value can fluctuate rapidly in a short period of time

This makes digital currency investment risky.

Question 5

What is another term for digital currency?

Answer 5

Crypto currency

This term is commonly used interchangeably with digital currency.

Question 6

How are transactions made using crypto currency tracked?

Answer 6

Transactions are publicly available and tracked using cryptography

This adds a layer of transparency to the process.

Question 7

Name two examples of digital currencies.

Answer 7

• Bitcoin
• Ethereum

These are among the most recognized forms of digital currency.

Question 8

What is a blockchain?

Answer 8

A blockchain is a digital ledger that records every transaction made with a particular digital currency

This ledger is permanent and unalterable.

Question 9

What is a key feature of transactions in a blockchain?

Answer 9

Transactions are time-stamped and added permanently

This ensures the chronological order of transactions.

Question 10

What does decentralised technology mean in the context of blockchain?

Answer 10

It is not controlled by a single entity or authority

Every participant has a copy of the ledger.

Question 11

What creates a secure record of transactions in a blockchain?

Answer 11

Blocks of transactions are linked together using cryptographic algorithms

This prevents tampering with the transaction history.

Question 12

How is the legitimacy of a transaction in the blockchain ensured?

Answer 12

Each transaction must be verified by multiple participants in the network

This verification process helps prevent fraudulent activity.

Question 13

True or False: In the IGCSE exam, digital currency and crypto currency are considered the same thing.

Answer 13

True

This simplification is made for exam purposes, although they are not strictly the same in real life.