Q1. Which of the following best captures the key innovation of Bitcoin compared to earlier digital cash systems?

1. The use of symmetric encryption for private communication between banks.
2. Combining proof-of-work, a distributed ledger, and economic incentives to solve double spending without a central authority.
3. Issuing digital money only through central banks and commercial banks.
4. Storing all account balances in a private institutional database.

Select one:

Q2. Which principle most directly explains why users do not need to “trust” a central institution in public blockchains?

1. All transactions are reversible by a central administrator.
2. Access to the network is restricted to licensed entities only.
3. Security and correctness are enforced by open consensus rules and cryptography, not institutional discretion.
4. Only government nodes are allowed to validate blocks.

Select one:

Q3. In the layered view of a cryptocurrency system, which layer is primarily responsible for how nodes agree on a single canonical ledger?

1. The protocol specification layer.
2. The network (P2P) routing layer.
3. The consensus layer.
4. The application/user interface layer.

Select one:

Q4. (Short answer) Briefly explain why immutability in a blockchain is described as an economic and computational property rather than an absolute guarantee.

Q5. In public blockchains, user identity is most precisely represented by:

1. The IP address of the node they are connected to.
2. The email address used to register at an exchange.
3. The possession and control of a private key corresponding to a public key or address.
4. The national ID number recorded in a central database.

Select one:

Q6. Which statement best describes a Hierarchical Deterministic (HD) wallet?

1. A wallet that stores all user funds in a single, non-derivable address.
2. A wallet that generates many addresses deterministically from one master seed phrase.
3. A wallet that relies on banks to recover lost private keys.
4. A wallet that only supports one cryptocurrency.

Select one:

Q7. In an account-based system such as Ethereum, which elements are always part of a basic transaction?

1. Inputs, outputs, and locking scripts.
2. Sender address, receiver address, value, nonce, and gas-related parameters.
3. Only the sender’s public key.
4. Only the receiver’s private key.

Select one:

Q8. (Short answer) Explain the purpose of a nonce in an account-based blockchain (e.g., Ethereum) and how it helps prevent replay attacks.

Q9. Which of the following best describes a utility token?

1. A token that solely represents legal ownership of a physical building.
2. A token granting access or usage rights within a specific protocol, platform, or service.
3. A token that must always be fully collateralised by fiat currency.
4. A token that can only be traded on centralised exchanges.

Select one:

Q10. A governance token typically allows holders to:

1. Dictate global interest rates set by central banks.
2. Vote on protocol parameters, upgrades, and treasury allocation within a decentralised system.
3. Unilaterally reverse any transaction on the blockchain.
4. Mine blocks without hardware or stake.

Select one:

Q11. Which statement best characterises the role of cryptoeconomics in blockchain protocol design?

1. It focuses solely on compressing transaction data.
2. It uses economic incentives and game theory to align participant behaviour with protocol security and correctness.
3. It deals only with legal classification of securities.
4. It is unrelated to consensus and only applies to user-interface design.

Select one:

Q12. (Short answer) Give one example of how a token can capture value from a protocol (e.g., fee sharing, burning, staking rewards) and explain the mechanism in one or two sentences.

Q13. Which statement best differentiates a centralised exchange (CEX) from a decentralised exchange (DEX)?

1. CEXs always use automated market makers, while DEXs always use traditional order books.
2. CEXs take custody of user funds and maintain internal order books; DEXs rely on smart contracts and user self-custody.
3. DEXs require full KYC for all users, while CEXs never do.
4. DEXs can only trade Bitcoin, not tokens.

Select one:

Q14. In a constant product AMM with invariant x · y = k, what happens when a trader buys token X from the pool?

1. Both reserves stay constant and only k changes.
2. The reserve of X decreases, the reserve of Y increases, and the price of X (in terms of Y) rises.
3. The reserve of X increases and its price falls.
4. Only the token balances of the trader change; pool reserves are fixed.

Select one:

Q15. In practice, slippage in crypto trading refers to:

1. The difference between the expected trade price and the actual executed price.
2. The latency of broadcasting transactions across the network.
3. The spread between highest bid and lowest ask only.
4. The size of the trading fee charged by the exchange.

Select one:

Q16. (Short answer) Briefly describe what arbitrage is in the context of crypto markets and how it contributes to price alignment across exchanges or pools.

Q17. A 51% attack on a Proof-of-Work blockchain enables an attacker to:

1. Increase the maximum block size without consensus.
2. Unilaterally change the hashing algorithm.
3. Control block production sufficiently to perform double spends and censor specific transactions.
4. Print unlimited new coins outside the protocol rules.

Select one:

Q18. Which description best matches a smart contract exploit such as a re-entrancy attack?

1. Miners choosing not to include a transaction in a block.
2. Attackers repeatedly calling a vulnerable contract function before its internal state is updated, draining funds.
3. Validators voting to change the consensus algorithm.
4. Nodes going offline due to power failure.

Select one:

Q19. From a regulatory perspective, a token is most likely to be treated as a security if:

1. It is only used to pay transaction fees on-chain.
2. It is marketed primarily as an investment with expectation of profit from the efforts of a specific team or promoter.
3. It is used only to vote on protocol parameters.
4. It is pegged one-to-one to a fiat currency.

Select one:

Q20. (Short answer) Provide one concrete example of a systemic risk in DeFi (e.g., oracle failure, stablecoin depegging, bridge exploit) and explain in one or two sentences how it can cascade across multiple protocols.