The correct answers depend entirely on the examiner's understanding of crypto, so even if experts reply, it is possible that these might be the incorrect answer according to the examiner. Consider this a disclaimer and "no liability". It took me about 12 hours to write.
1.In Bitcoin, your private key allows you to verify whether a transaction has been signed with the correct public key. (3 PTS)
That is false, because you do not need the private key to verify a signature, and the cryptographic verification algorithm takes the transaction signature, the raw transaction data, and the public key as an input [note: There is usually a signature for each transaction input, except in some special cases I won't delve into here].
2.The largest share of the Bitcoin miner’s income is generated via transaction fees. (3 PTS)
No, it currently comes from the block reward. But this could change in the distant future as the block rewards shrink.
3.Blocks on the Ethereum blockchain contain fewer transactions than blocks on the Bitcoin blockchain. Therefore, Bitcoin can process more transactions per second. (3 PTS)
False, it is well known that Bitcoin has a lower TPS than Ethereum. While I don't know the blocksize of Ethereum, I'm going to assume that it's much larger than 1MB.
4.The monetary policy of Ethereum is more flexible than the monetary policy of Bitcoin. (3 PTS)
If monetary policy means "price corrections" and flexible means "volatile", then I would say this is true - if we take
percentage differences in price changes i.e. standard deviations.
5.Sokolov (2021) demonstrates that Bitcoin enables ransomware attacks. (3 PTS)
No and this is not even the topic of that paper.
6.The price for Ethereum Gas depends on the demand for transactions on the Ethereum blockchain. (3 PTS)
7.Gas denotes the amount of Ether which needs to be paid for a transaction. (3 PTS)
Both true (I'm not an Ethereum expert so I can't comment more about that, sorry)
8.Fees for transactions to be recorded on the Ethereum blockchain solely depend on the computational effort to record a transaction on the Ethereum blockchain. (3 PTS)
No longer true ever since Ethereum switched to Proof of Stake last month. But check with your examiner and make sure your syllabus is up-to-date.
9.Deploying a smart contract onto the Ethereum Blockchain does not require Gas. (3 PTS)
Not true.
10.Easley, O’Hara, and Basu (2019) show that transaction fees increase whenever the (coinbase) reward for mining a block goes down. (3 PTs)
False (I checked on sci-hub)
11.Bitcoin provides real anonymity to its users. (3 PTs)
Not true, you can still be fingerprinted by your public address and transactions as they are not obfuscated.
12.A problem of proof-of-stake as a consensus mechanism is that nothing is really at stake. 3 (PTS)
No, its problem is that it increases centralization of mining by lowering the cost to increase your mining capacity to almost a constant amount, which increases the risk of censorship (for more information on this go to
https://bitcoincleanup.com, where I explain this problem in detail - yes I made that site).
13.Proof-of-work is more easily scalable than proof-of-stake. 3 (PTS)
You can't easily manufacture and throw new miners into the network, so I'd say false. But the price you have to pay for that scalability can be read in my previous reply.
14.The stablecoin DAI can be used to lever crypto investments. (3 PTS)
15.The stablecoin DAI can be used to hedge crypto investments. (3 PTS)
16.The stablecoin DAI is as risky as the US Dollar, which it is pegged to. (3 PTS)
17.Providers of liquidity in liquidity pools face impermanent loss when one asset in the liquidity pool appreciates in value. (2 PTS)
I can't help you with any of these unfortunately, as I know nothing about how stablecoins work. But exchanges offer it, so I'd say the first two are true, and the 3rd false - in fact all stablecoins have more risk than the dollar, because they are unregulated.
18.Decentralized, permissionless proof-of-work blockchains guarantee the immutability of their (governance) protocols. (4 PTS)
19.Decentralized, permissionless proof-of-stake blockchains guarantee the immutability of their (governance) protocols. (4 PTS)
20.Permissioned blockchains provide better protection against a “51% attack”. (3 PTS)
None of these are true, for the first two a soft fork can always be made that adds features to the protocol but never modifies or removes existing features, and for the 3rd a 51% attack has nothing to do with the blockchain, it's in the consensus algorithm used like PoW, PoS.
21.If you want to provide liquidity to a liquidity pool that swaps Ether into Tether, you need to add either Ether or Tether to the liquidity pool.
22.An automated market maker determines the exchange rate in liquidity pools by applying a constant sum function. (2 PTS)
23.Decentralized exchanges operating liquidity pools do not allow for arbitrage. (3 PTS)
See above. I can't help you with liquidity pool stuff, it's not my area.
24.The token BAT is a non-fungible token. (3 PTS)
No. an NFT wraps a digital asset onto the blockchain, while BAT doesn't wrap anything.
25.The main purpose of the segregate witness upgrade was to increase the number of Bitcoin transactions that can be included in one block. (3 points)
No, that was not its
main purpose, but it was a side effect. The main purpose was to prevent transaction malleability - a condition where duplicate transaction IDs can be made by modifying the transaction in a special way - by moving the ScriptSig data into the witness (hence why it is called
segregated witness).
26.The ASIC producer Bitmain will profit from Ethereum’s switch to proof-of-stake. (3 points)
No, the polar opposite in fact. ASICs use proof of work only and are useless for Proof of Stake, so the manufacturers of Ethereum ASICs, the mining pools, and their customers have lost a lot of money from the industry being destroyed overnight.
27.TerraUSD was a crypto-collateralized stablecoin. (3 points)
No, it was an algorithmic stablecoin - it wasn't backed by anything (at least Tether, as shady as they are, have at least 75% backing of all their USDT), but it relied on an algorithm to keep the price up.
1.Assume you own one coin of the cryptocurrency “Fork-a-lot”. At one point, there is a protocol update and some miners refuse to go along with the protocol update. As a consequence of the hard fork, these miners keep mining the old protocol which they call “Fork-a-lot Classic”. The majority of miners, however, upgrades and continues mining “Fork-a-lot”.
2.Which coin will you own after the hard fork? (2 PTs)
Both of them, because the blockchain was literaly cloned.
3.What are the four key innovations that Nakamoto integrated into Bitcoin? (4 PTS)
Proof of Work, public key identities using ECC & ECDSA, deceleration of the added supply of bitcoins which causes and deflation, and distributed ledger supplied with a P2P protocol.
4.What are the three key questions that a distributed consensus mechanism needs to answer? What are Bitcoin’s answers to these questions? (6 PTs)
How to achieve universal consensus of rules between nodes (by clearly defining the P2P protocol and data structures used in it), preventing those rules from being violated by attacks (nodes only accept the longet valid chain tip), and adding new rules in a compatible and decentralized way (using Bitcoin Improvement Proposals or BIPs).
5.What is a mining pool? (2 PTS)
6.What is the economic rationale behind mining in a mining pool rather than mining on your own? (2 PTS)
A mining pool is a server that accepts hashrate from many different miners, to increase the chance of finding a block, and then distributes the rewards to all participating miners in proportion to their hash rate. Like I said, it makes it easier to find a block during high-difficulty periods of mining.
7.Explain the impossibility triangle. (5 PTS)
Also known as the Trilemma and first coined by Paul Sztorc, the trilemma is an issue in blockchains where they have to choose between two of scalability, security, and decentralization. Currently, Bitcoin is secure and decentralized, but not scalable. Because it is not possible to increase transaction throughput without making nodes use extra storage, and if applied on Layer 1 will compromise the decentralization. An alternate route is to delete old blocks that have spent transactions to save space but then that would compromise security.
Sztorc proposes Merged Mining (BIPs 300 & 301) to fix this problem, but personally I am not a big fan of officially tying up Bitcoin's economy to a bunch of random altcoins. Lightning network fixes some but not all issues with scalability. I am ambitious that a proposal that I am working on will be able to effectively address the issue of Bitcoin scalability on a second, independent layer.
8.Name and explain one recent layer-2 innovation that addresses the scalability problem associated with proof-of-work-based blockchains. 3 (PTS)
Like I said, it's the Lightning Network and it addresses it by creating a series of off-chain transactions betwen two parties and only publishing the net difference on the blockchain, but it has limitations (it will not work when many people need to send or receive funds to/from a single guy).
9.If I provide you with a SHA256-hash of my name, would it be in principle possible for you to verify whether the hash is indeed the output of my name? (2 PTS)
Yes, I can simply input the name into SHA256 and verify the hashes match.
10.What is the purpose of Ethereum’s Beacon chain? (3 PTS)
Sometime to do with Proof of Stake onboarding which I am not knowledgeable in.
11.A liquidity pool operated by an automated market maker contains 3000 Ether (ETH) and 9,000,000 Tether (USDT). You want to exchange 50,000 USDT into ETH. How many ETH can you take out of the pool? (3 PTS)
12.Follow-up to previous question: What is the exchange rate after the transaction (with USDT being the numeraire)? (2 PTS)
I can't help you with these questions.
13.What are the main differences between Bitcoin and Ethereum? (6PTS)
Ethereum has smart contracts, Bitcoin does not. Also, Bitcoin won't hardfork if some developers' DAO gets hacked. The smart contract platform of Ethereum enables many use cases such as DeFi and NFTs at the expense of increased public scrutiny of the Ethereum blockchain when malicious stuff happen on it (cf. Tornado Cash).
Ethereum uses Proof of Stake, Bitcoin will never use that even if you try to melt iron on us to change our minds.
As a result of continuous innovations and resulting fallout when they are inevitably used in high-profile malicious activities, investors have less confidence in Ethereum as a store of value than Bitcoin, which is reflected in their sheer difference of prices.
Ethereum's blockchain is larger than Bitcoin as a result of having a larger blocksize. As a result, it's harder to run and ETH node (requires 2TB SSD) than a Bitcoin node (only requires a 512GB HDD).
14.Every 210,000 blocks the mining reward for mining Bitcoin gets reduced. By what percentage do mining rewards get reduced? (1 PT)
Duh, by half. That's why it's called a halvening
15.What is the difference between a staker and a validator in Ethereum 2.0? (2 PTS)
16.What is an ERC-20 token? (3 PTS)
I'm skipping these but you should be able to find the answers with some digging.
17.Name and explain the two major concerns voiced about Tether. (6 PTS)
It's not backed by sufficient reserves and they can arbitrary seize any coins they want as a result of lack of regulation. United States hates Tether because it's unregulated and is currently trying to get a bill through that limits stablecoin usage by Americans, in favor of a CDBC. On the other hand, I hate Tether because funds can be arbitrarily frozen like an unregulated jungle bank and because it's capable of performing a Terra Luna-style crash despite having some (insufficient) reserves and no balancing algorithm that wrecked Terra in the first place.
18.Filecoin is an open-source, public cryptocurrency and digital payment system intended to be a blockchain-based cooperative digital storage and data retrieval method. Filecoin is built by Protocol Labs and will be launched in the near future. Filecoin allows users to rent unused hard drive space. A blockchain mechanism is used to register the deals. Due to Filecoin's decentralized nature, it protects the integrity of data's location making it easily retrievable and hard to censor. It also allows people on their network to be their own custodians of the data that they store. Additionally, Filecoin also rewards the network nodes that mine and store data on their blockchain network. Filecoins have been sold to accredited investors. Is Filecoin a coin, a security token, or a utility token. Why? 2 (PTS)
18.Is Filecoin a security according to U.S. securities law? Why? (4PTS)
19.Name and explain three benefits of utility tokens (3 PTS)
20.How does Szabo (1986) define smart contracts? (2 PTS)
21.What is the difference between a hard fork and a soft fork? (2 PTS)
22.What are the two key innovations coming to the Ethereum blockchain with Ethereum 2.0? (4 PTS)
23.What is the role of oracles in smart contracts? Can you provide one example of an oracle used in a smart contract? (2 PTS)
24.You provide 10 Ether and 35,000 DAI to a liquidity pool. With this contribution to the liquidity pool, you provide 10% of the liquidity offered by the pool. One month later, the liquidity pool has earned 0.5 Ether in transaction fees and the price of Ether has increased by 150%. Assuming that your sharee of the liquidity pool stayed constant over the past month, what is your net profit (in Ether) from providing liquidity? (4 PTS)
25.Describe how the mechanism implemented in MakerDAO’s smart contract MakerVault allows crypto investors to leverage their crypto-investment. (4 PTS)
26.Describe how the mechanism implemented in MakerDAO’s smart contract MakerVault allows crypto investors to hedge their crypto-investment. (4 PTS)
27.According to Cong, Li, Wang (2021), what is the determinant of the value of utility tokens? What does this mean in laymen’s terms (i.e., in your own words)? (3 PTS)
28.Name three advantages of a security token offering relative to a traditional IPO? (3 PTS)
I can't help you with any of these except that a hardfork makes a breaking change in the consensus, while a soft fork merely makes compatible changes to the consensus in a way that they can still be followed by old nodes.
And a security is any item which is bought on the promise that it can be sold back to the seller at a later date for profit. Most coins (including the ones mentioned) are not securities.
29.In a recent article, the Economist argues that regulators should treat Tether like a bank. Would you agree? (4 PTS)
Not like a traditional bank, as that would restrict them to operating in the US. But they must operate more like a fintech which provides a single financial service (USDT) to users, and periodically report to the Feds financial details like its assets, its volume & supply, etc. Instead of KYC you'd retain the funds freezing feature.
30.Name and explain three reasons why regulators are worried about cryptocurrencies (3 PTS)
They are volatile, scammers and hackers use them to scamderaud people (and nobody seems to be doing anything about it) and they are sometimes used for sanctions evasions (but in most cases are quickly busted).
31.What is an ERC-20 token? (2 points)
32.What is an ERC-721 token? (2 points)
33.What is the purpose of the Howey-test? (1 point)
34.What does constitute a security according to the Howey test? (4 points)
35.Describe the evolutionary steps from Uniswap v1 to Uniswap v3 (3 points)
I can't help you with these although the Howey test is easily searched on Google. You should find someone who is knowledgeable in liquidity pools and Ethereum.
