Privacy and Zero-Knowledge Innovations BDC Practice Questions (Page 5)

Questions 21–25

1. 21expert · hard

   A regulatory body requires a blockchain-based asset transfer system to provide audit trails for all transactions, but the system uses zero-knowledge proofs to hide transaction details. Which approach allows the system to satisfy both privacy and auditability?

   • AUse a zero-knowledge proof that reveals all data to everyone.
   • BRely on off-chain auditors with access to the private keys of all users.
   • CUse selectively disclosure zero-knowledge proofs that allow authorized auditors to reveal specific details.
   • DStore all transaction data in plaintext on-chain and use zero-knowledge proofs only for user authentication.
   Reveal Solution Discussion Select an answer first
2. 22expert · hard

   A decentralized voting system must allow voters to prove they are eligible to vote without revealing their identity or vote. The system must also be auditable to ensure no votes were tampered with. The team is considering using zk-SNARKs. Which additional challenge must they address?

   • AThe trusted setup for zk-SNARKs could be a single point of failure if the toxic waste is compromised.
   • Bzk-SNARKs are not quantum-resistant, so future quantum computers could break them.
   • Czk-SNARKs require a trusted third party to manage voter identities.
   • Dzk-SNARKs cannot be used for voting because they are too slow.
   Reveal Solution Discussion Select an answer first
4. 23foundation · easy

   What is the primary benefit of using zero-knowledge proofs in smart contracts over simply encrypting the contract's data?

   • AEncryption is not secure enough for blockchain applications.
   • BEncryption prevents the contract from executing at all.
   • CEncryption alone does not allow the network to verify that the contract's logic was executed correctly.
   • DEncryption is computationally expensive, while zero-knowledge proofs are always cheaper.
   Reveal Solution Discussion Select an answer first
5. 24foundation · easy

   How do zero-knowledge proofs primarily enhance privacy in blockchain transactions?

   • ABy using a trusted third party to validate transactions and keep them secret from the public ledger.
   • BBy anonymizing the IP addresses of blockchain nodes to hide the origin of transactions.
   • CBy allowing a party to prove that a transaction is valid without revealing the transaction's inputs, outputs, or other sensitive details.
   • DBy encrypting all transaction data so that only the sender and receiver can decrypt it.
   Reveal Solution Discussion Select an answer first
6. 25expert · hard

   A financial institution is implementing a confidential asset system where the amounts are hidden, but regulators need to verify that no money laundering is occurring. The system uses zero-knowledge proofs. Which feature is essential for regulators to perform their oversight role?

   • AThe ability for anyone to view all transaction details.
   • BThe ability for users to delete their transaction history.
   • CThe ability to selectively disclose transaction details to authorized auditors.
   • DThe ability for the institution to change transaction amounts after they are recorded.
   Reveal Solution Discussion Select an answer first