5.2

Question 1

Define digital currency.

Answer 1

• Digital currency only exists electronically (ONLY DIGITAL FORM)
• It has no physical form, unlike conventional fiat currency.

Question 2

Outline the main differences b/w digital currency + cryptocurrency.

Answer 2

• Digital currency relies on a centralized banking system, whereas cryptocurrency uses DECENTRALIZATION.
• The cryptocurrency system is more secure as it works in a blockchain network
• Cryptocurrency transactions are PUBLICLY AVAILABLE + can be TRACKED, unlike digital currency transactions

Question 3

Define blockchain.

Answer 3

• It is a digital ledger, that is, a time-stamped series of records that cannot be altered.
• It facilitates the process of recording transactions and tracking assets in a business network.

Question 4

In what areas is blockchain used?

Answer 4

cryptocurrency (digital currency) exchanges
politics
education

Question 5

How is blockchain used to record digital currency transactions?

Answer 5

• The blockchain is a shareable ledger, a digital file that records all transactions.
• The ledger is distributed across several nodes, meaning the data is replicated and stored instantaneously on each node across the system.
• If one node has an error in its data, it can use the thousands of other nodes as a reference point to correct itself.