Web3 and Blockchain Challenge

What is a smart contract?

• A smart contract is a type of cryptocurrency used for trading.

• A smart contract is a self-executing contract with the terms written into code on a blockchain.

• A smart contract is a traditional legal agreement signed on paper.

• A smart contract is a physical document that requires notarization.

How do decentralized finance (DeFi) platforms operate?

• Rely on banks for transactions.

• Use physical currency.

• Use blockchain and smart contracts without intermediaries.

• Need a central authority.

What distinguishes a non-fungible token (NFT) from a fungible token?

• NFTs can be divided into smaller units.

• NFTs are interchangeable, fungible tokens are unique.

• NFTs are unique and not interchangeable; fungible tokens are identical and interchangeable.

• Both NFTs and fungible tokens are identical and freely exchanged.

What is the purpose of blockchain consensus mechanisms?

• To store data centrally.

• To remove security in transactions.

• To speed up transactions without checks.

• To agree on transaction validity and ensure data integrity.

What is crypto mining and how does it work?

• Validating transactions and adding them to a blockchain by solving math problems.

• Storing cryptocurrencies in a digital wallet.

• Creating new cryptocurrencies by buying them.

• Trading cryptocurrencies to earn profits.

What are gas fees in the context of blockchain transactions?

• Penalties for failed transactions.

• Costs paid to miners for processing.

• Rewards for holding cryptocurrency.

• Amount needed to create a new blockchain.

What is the main difference between proof of work and proof of stake?

• Proof of Work is more energy-efficient than Proof of Stake.

• Proof of Work is faster than Proof of Stake.

• Proof of Stake requires more hardware than Proof of Work.

• Proof of Work relies on computational power, while Proof of Stake relies on the amount of cryptocurrency held.

How does a smart contract execute automatically?

• A smart contract requires approval from a central authority to execute.

• A smart contract runs only during specific times of the day.

• A smart contract executes automatically when predefined conditions are met, triggering its code on the blockchain.

• A smart contract executes when a user manually triggers it.

What role do liquidity pools play in DeFi?

• For staking rewards only.

• Provide liquidity for trading and support price stability.

• Only for centralized exchanges.

• Primarily for lending and borrowing.

What are some common use cases for NFTs?

• Digital art, collectibles, virtual real estate, gaming items, and music.

• Physical paintings

• Printed books

• Traditional currency