May 29 2020 |
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This is the EXIN Blockchain Foundation (BLOCKCHAINF.EN) sample exam. The Rules and Regulations for EXIN’s examinations apply to this exam.
This exam consists of 40 multiple-choice questions. Each multiple-choice question has a number of possible answers, of which only one is correct.
The maximum number of points that can be obtained for this exam is 40. Each correct answer is worth 1 point. You need 26 points or more to pass the exam.
The time allowed for this exam is 60 minutes.
Copyright © EXIN Holding B.V. 2020. All rights reserved.
EXIN® is a registered trademark.
1 of 40
What is an advantage of a public blockchain?
It does not use disinterested third parties to secure blocks, as all participants have a vested interest.
It is more resilient against fraud, because it uses federated nodes to combat fraud.
It is open to everyone in the world without permission and licensing requirements.
Its networks are built by for-profit companies and the working of the network is guaranteed.
2 of 40
What is a blockchain?
A centralized database that holds a subset of all transactions on all nodes.
A client-server database existing on a limited number of nodes at the same time.
A distributed database with a record of all transactions on the network.
A standalone database with history of all transactions on various nodes.
3 of 40
What is the function of a lightweight node within a blockchain network?
It stores a complete history of every transaction on the network.
It stores purchased cryptocurrency for users of a blockchain network.
It verifies transactions by piggybacking on the work of full nodes.
4 of 40
a classification for a node?
5 of 40
A bearer instrument used to transfer value between two parties over a blockchain network.
What is this instrument?
6 of 40
What is a
characteristic of a public blockchain?
Allowing a user to elect nodes to process transactions
Allowing anyone to participate in the blockchain network
Allowing control over who can participate and at what level
Allowing only trusted parties to operate their blockchain
7 of 40
What is an example of the use of cryptography in a blockchain?
Accessing private or hybrid blockchains by using a private key
Creating cryptocurrency as a reward for mining nodes
Keeping blockchains secure from 51% attacks by corrupt nodes
Securing transfers of cryptocurrency between recipients
8 of 40
How do blockchains use private and public-key cryptography?
Asymmetric encryption allows a sender to transfer cryptocurrency to a public key. The recipient can then access these funds with their private key and hold it in their wallet.
In public-key cryptography, one key is used to encrypt and decrypt transaction. The sender uses this key to send cryptocurrency and the recipient’s wallet holds it after decryption.
Symmetric encryption allows a sender to transfer cryptocurrency to another user. The recipient can then access their funds when the sender grants access to their private key.
The algorithm in the blockchain encrypts and stores private and public keys to all user's wallets. Cryptocurrency then accesses their funds through their twenty-word passphrase key.
9 of 40
How do hybrid blockchain networks combat 51% attacks?
Through a central controller ensuring the security of each node in the network
Through a Proof of Work (PoW) algorithm, which allows miners to secure the network
Through incentivization, where miners receive currency for securing the network
Through Merkle tree roots, that allow the network to restore itself to its last valid block
10 of 40
How do blockchains function like ledgers?
They hold a record of all transactions that have ever occurred on a network.
They hold vast amounts of transaction data as a centralized database.
They periodically update all balances of each wallet to the blockchain.
11 of 40
What is the task of miners in a blockchain network?
Miners act as a single third party to aggregate records and provide trust in the network by the miners’ authority.
Miners are computers that allow access to the blockchain, ensuring the number of corrupt nodes will stay low.
Miners are nodes that compete for a reward by calculating the correct nonce to make a transaction possible.
Miners determine the consensus rules that should be followed and interfere when these rules are broken.
12 of 40
Which description fits
the Proof of Work (PoW) consensus algorithm?
A collaborative consensus algorithm, where approved accounts do the validation.
A collaborative consensus algorithm that is facilitated by farmers, who offer leftover memory of their computer to make transactions possible.
A consensus algorithm, where the validation is done for the entire transaction flow, including not only the correctness, but also the sequence of transactions.
A low-cost and fast algorithm, where a node needs to deposit cryptocurrency to guarantee the transaction.
A noncompetitive consensus algorithm, where validation is done by elected nodes, which send cryptocurrency to an address, from which it cannot be retrieved.
An algorithm that involves collaborative validation, performed by validators, which are chosen outside of the consensus.
An algorithm that works in a trusted execution environment and proves the time when the transaction has taken place.
An intensive and expensive, competitive algorithm where each mining node on the blockchain is competing to secure blocks.
13 of 40
A competitive consensus algorithm that was developed because blockchains had difficulty meeting the transaction speed demands.
Which consensus algorithm is this?
Delegated Proof of Stake (DPoS)
Proof of Burn (PoB)
Proof of Stake (PoS)
Proof of Work (PoW)
14 of 40
Which consensus algorithm is the
Delegated Proof of Stake (DPoS)
Proof of Authority (PoA)
Proof of Space (PoSpace)
Proof of Work (PoW)
15 of 40
What is an advantage of using the consensus algorithm Proof of Elapsed Time (PoET) instead of Proof of Work (PoW)?
PoET can often be used in a permissionless blockchain more easily than PoW, because PoET’s lottery system for node selection is secure.
PoET has generally lower transaction costs than PoW, because the hardware needed is more generic than the hardware needed for PoW.
PoET is much more secure than PoW, because PoET supports the trusted execution environment (TEE) by time-stamping the transactions.
PoET is usually faster than PoW, because fewer nodes compete for validation than in PoW, since PoET randomly selects the nodes.
16 of 40
An attacker tries to corrupt the transaction history of a blockchain to be able to spend a token or a cryptocurrency twice.
What is the
likely thing this attacker did?
The attacker changed the transaction on his node and propagated it in the network.
The attacker edited the smart contract and recovered investor’s cryptocurrency.
The attacker gained control of more than 51% of the network’s computing power.
The attacker hard-forked the network and created a new blockchain network.
17 of 40
Blockchain networks are vulnerable to 51% attacks.
Which network would incentivize hackers
to break the network?
18 of 40
One of the greatest threats to the blockchain community is the narcissism of small differences.
What is the result of this narcissism of small differences?
One community group makes fun of another community group over small things, resulting in greater collaboration.
The community cares about and works to resolve small differences that cannot be perceived by outside groups.
The community has developed many similar projects and these fight with one another over small differences.
The community has grown closer and works together in a collaborative fashion to solve common problems.
19 of 40
How do fraudsters use a Ponzi scheme?
A fraudster convinces a victim to pay for receiving something of greater value later on.
A fraudster finds investors, then dumps the tokens of the investors to crash the market.
A fraudster pays dividends to initial investors using the funds of subsequent investors.
A fraudster steals credit cards and uses them to buy money, goods or property.
20 of 40
Which characteristic of a blockchain network is also its protection?
The greater the number of full independent nodes, the harder it is to compromise the data in the blockchain.
The lower the number of miners in the blockchain, the higher the incentive is for securing the network.
The more centralized the control of the blockchain is, the harder it is to secure the data and avoid fraud.
The more complicated the Proof of Work (PoW) algorithm is, the more rewarding it is to secure the network.
21 of 40
How can information be secured in a blockchain?
By using a closed peer-to-peer (P2P) network, sharing information across platforms
By using a distribution of cryptocurrencies over miners through the network
By using asymmetric cryptography, consisting of a public and private key
By using distributed ledger technology (DLT), which records transactions at the source
22 of 40
In what way do blockchains use a public witness?
A digital courthouse or library acts as a public witness to store information to reference.
A node on a blockchain network attests to the accuracy and truthfulness of information.
A person sends a transaction over a public network to earn rewards as a public witness.
A preferred node can be elected to attest to the accuracy and truthfulness of information.
23 of 40
Blockchain enables self-sovereign identity.
How does blockchain do this?
It enables centralized third parties to offer easy-to-use and valid identity information.
It enables each person to have exclusive control of their money, property and identity.
It enables governments to effortlessly issue identities with advanced digital certificates.
It enables only internet companies to offer world-class secure personal identity repositories.
24 of 40
Public blockchains give an incentive to encourage users to mine blocks and secure the network.
What incentive is this?
Public blockchains allow users to create tokens to sell on secondary markets.
Public blockchains do not offer rewards, because they are open source.
Public blockchains offer cash rewards for running mining nodes.
Public blockchains offer rewards for mining in the form of cryptocurrency.
25 of 40
An organization wants to develop smart contracts, based on blockchain technology. The organization does not wish to burden employees with maintaining the security of the blockchain.
What blockchain technology fits the organization
A hybrid blockchain
A private blockchain
A public blockchain
26 of 40
What is a
characteristic of the Hyperledger network?
It is a public blockchain network and one of the oldest networks, existing since 2009.
It is private, open sourced and can run everyone’s own distributed ledger technology (DLT).
It utilizes cryptocurrency as a reward mechanism, which makes the network more secure.
It utilizes the Proof of Stake (PoS) consensus algorithm as its main security measure.
27 of 40
What is the
use case for smart contracts?
Digitalize and automate legally binding contracts using artificial intelligence (AI)
Enforce the execution of contracts in the legal system using cryptocurrencies
Ensure automatic payments by predetermined actions or events in insurance contracts
Extend the Bitcoin blockchain, the best-known smart contract platform, to the judicial system
28 of 40
In which scenario is a smart contract the
solution to the problem?
A bartender wants to force customers to pay for their drinks by transferring cryptocurrency to his wallet.
A chief financial officer wants her smart watch to notify her when her partner enters their front door.
An energy company wants to automatically buy power when the price reaches a predetermined rate.
An insurance company wants to pay out a farmer whenever the case manager feels it is best to do so.
29 of 40
What are DApps designed to do?
Execute smart contracts with the business logic in the front-end of a standalone application
Manage cryptocurrencies only, without any embedded voting system for governance of the blockchain
Run applications on a peer-to-peer (P2P) network expanding smart contracts beyond simple value transfer
Support applications that run on multiple public cloud providers avoiding any vendor lock-in and fraud
30 of 40
What is the role of a DAO (decentralized autonomous organization)?
Address the principal-agent dilemma with collaboration and acceptance of actions within agreed rules
Embed regulated online smart contracts with the current judicial system, using public blockchains
Offer complex online smart contracts without any link to tangible and intangible offline assets
Provide a private blockchain contract platform on which users can run their online applications
31 of 40
How can blockchain technology
help securing identity data?
By eliminating third parties through providing secured-data storage at a user’s server
By encoding all the health data and save it on a private and permissionless blockchain
By protecting data that has been submitted on the internet using a cryptographic algorithm
By providing information personal data without disclosing the actual data that proves it
32 of 40
What is the value of using blockchain networks with Internet of Things (IoT)?
Allowing blockchain users to follow self-driving cars and access these cars
Avoiding a spoofing attack using the secured identity that is stored on a blockchain
Enabling software that programs itself to solve problems without human intervention
Solving expensive and complex calculations using Hyperledger Fabric mining
33 of 40
Blockchain technology has made decentralized marketplaces possible.
What is a benefit of a decentralized marketplace?
It is based on open-source technology, so it can be used without any investment
It is not under a paid license to operate and therefore it is managed better
It is relatively cheap due to the use of cryptocurrency and is very accessible
It is tamper-proof, resilient to being shut down and trustworthy due to smart contracts
34 of 40
How does blockchain improve supply chains?
By automatically creating trade agreements between two parties
By creating safe centralized marketplaces to trade goods on
By stabilizing the national currencies of the countries involved
By transferring tokenized ownership through a software system
35 of 40
The Monetary Authority of Singapore (MAS) and blockchain company R3 partnered together.
What did they achieve together?
The creation of smart contracts and stable coins
The facilitation of interbank transmission of messages
The first interbank payments without limitations of time zones
The launch of wire transfers using cryptography
36 of 40
What is digital fiat currency?
A digital form of currency, that represents a country’s financial reserves
An e-currency, that creates a transparent and borderless debt market
An online system, that enables making transactions without a bank account
37 of 40
How does blockchain technology benefit the insurance industry?
By avoiding compliance requirements of national authorities, which reduces overhead
By ensuring accuracy of data and automating micro insurances, which reduces costs
By introducing flexible premiums to be paid by customers, which increases profits
By setting up a digital mode of payment, which simplifies claims settlement
38 of 40
How does blockchain technology help to protect intellectual property rights (IP)?
It allows a user to include IP transactions in smart contracts.
It allows a user to record an event and establish the timeline.
It allows a user to record the creation of software packages.
It allows a user to send a transaction and receive IP ownership.
39 of 40
What is an example of how a government is actively promoting the use of blockchain?
China has created a regulatory sandbox that allows them to closely monitor the experiments in blockchain mining and create their own cryptocurrency.
Estonia offers e-Residency software, which is available to anyone in the world interested in operating a business online and from within the European Union.
Singapore’s Monetary Authority (MAS) is creating central bank digital money for payments between banks using distributed ledger technology (DLT).
40 of 40
Why is blockchain described as the technology that adds a layer of trust to the internet?
It allows individuals and groups to work together without having to trust each other or establish authority.
It creates a dedicated virtual private network (VPN) tunnel between two or more parties to carry out online fund transfers.
It provides mechanism for the government to create their own digital fiat currency as a replacement of physical currency.
It provides multifactor authentication to create and update records of cryptocurrency transactions securely.
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