A cryptocurrency exchange wants to allow users to trade without revealing their account balances to other users, but the exchange must be able to prove to auditors that it has enough reserves to cover all user deposits. Which approach is most suitable?

Publish a hash of each user's balance.

Use a trusted third party to hold all user funds.

Use a zero-knowledge proof of solvency that aggregates all user balances into a single commitment.

Publish all user balances in an encrypted format on-chain.

A digital asset exchange needs to support confidential assets where the type of asset (e.g., token A vs token B) is hidden, but the network must still prevent users from creating asset types out of thin air. Which cryptographic primitive should be used?

Public asset identifiers with encrypted amounts

Stealth addresses for each asset type

Asset commitments with zero-knowledge proofs of asset type consistency

Ring signatures over the asset type field

A research consortium is building a blockchain for scientific data sharing where the computations are complex and the data is sensitive. They want to prove that a computation was performed correctly without revealing the input data. They are considering zk-STARKs. Which advantage of zk-STARKs is most relevant to their use case?

Lower computational overhead for proving

A privacy-focused cryptocurrency exchange wants to allow users to transfer assets without revealing the transaction amount or the sender and receiver addresses on the public ledger. They also need to prove that the total supply remains constant to prevent inflation. Which mechanism should they implement?

Confidential transactions using Pedersen commitments and range proofs

Plain public addresses with encrypted memo fields

EC-CouncilBlockchain Developer Certification

Domain 9Objective 3

Privacy and Zero-Knowledge Innovations BDC Practice Questions (Page 3)

Part of the Advanced Concepts and Future Innovations domain, which makes up ~12% of our current practice bank.

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Questions 11–15

11application · medium
A cryptocurrency exchange wants to allow users to trade without revealing their account balances to other users, but the exchange must be able to prove to auditors that it has enough reserves to cover all user deposits. Which approach is most suitable?
Select an answer first
12application · medium
A digital asset exchange needs to support confidential assets where the type of asset (e.g., token A vs token B) is hidden, but the network must still prevent users from creating asset types out of thin air. Which cryptographic primitive should be used?
Select an answer first
13application · medium
A research consortium is building a blockchain for scientific data sharing where the computations are complex and the data is sensitive. They want to prove that a computation was performed correctly without revealing the input data. They are considering zk-STARKs. Which advantage of zk-STARKs is most relevant to their use case?
Select an answer first
14application · medium
A privacy-focused cryptocurrency exchange wants to allow users to transfer assets without revealing the transaction amount or the sender and receiver addresses on the public ledger. They also need to prove that the total supply remains constant to prevent inflation. Which mechanism should they implement?
Select an answer first
15application · medium
A company wants to allow its customers to prove they are over 18 without revealing their exact birthdate. They plan to use a zero-knowledge proof. Which property ensures that the verifier does not learn the birthdate?
Select an answer first

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Privacy and Zero-Knowledge Innovations BDC Practice Questions (Page 3)

Questions 11–15

A cryptocurrency exchange wants to allow users to trade without revealing their account balances to other users, but the exchange must be able to prove to auditors that it has enough reserves to cover all user deposits. Which approach is most suitable?

A digital asset exchange needs to support confidential assets where the type of asset (e.g., token A vs token B) is hidden, but the network must still prevent users from creating asset types out of thin air. Which cryptographic primitive should be used?

A company wants to allow its customers to prove they are over 18 without revealing their exact birthdate. They plan to use a zero-knowledge proof. Which property ensures that the verifier does not learn the birthdate?

Keep studying — Advanced Concepts and Future Innovations