A financial advisor is helping a client who wants to hold a large amount of cryptocurrency as a long-term investment. The client is concerned about theft from online attacks but also wants to be able to sell quickly if the market moves. Which wallet strategy best balances security and liquidity?

Keep all funds in a hot wallet on a reputable exchange for instant trading.

Store the majority in a hardware wallet and keep a small amount in a hot wallet for trading.

Print the private keys on paper and store them in a safe deposit box, with no digital copy.

Use a custodial wallet provided by the exchange and enable two-factor authentication.

A blockchain network is experiencing a high number of orphaned blocks due to miners finding blocks at nearly the same time. Which consensus parameter is most likely to reduce the frequency of orphaned blocks?

Increasing the block size limit.

Increasing the block time interval.

Decreasing the block time interval.

Increasing the mining difficulty.

A company is considering accepting a cryptocurrency that is a token on the Ethereum network and is pegged 1:1 to the US dollar. The token is used for payments and is backed by reserves held by a central issuer. How should this token be classified?

A governance token, because it is backed by reserves.

A payment token, because it is used as a medium of exchange and pegged to a fiat currency.

A security token, because it is issued by a central entity.

A utility token, because it is used on the Ethereum network.

A fintech startup is building a non-custodial wallet app. They want users to be able to sign transactions on their own devices without the private key ever leaving the device. Which cryptographic mechanism should the app use to ensure that a transaction is authentic and was not altered in transit?

Use a symmetric key shared between the user and the network to create a message authentication code

Encrypt the entire transaction with the user's private key and send it to the network

Hash the transaction data and encrypt it with the user's public key

Generate a digital signature by hashing the transaction and encrypting the hash with the user's private key

A company is creating a token on an existing blockchain like Ethereum to reward customers with loyalty points that can only be used within their own platform. Which type of token should they create?

A security token that represents ownership in the company

A utility token that grants access to the company's platform services

A payment coin that can be used as a general medium of exchange

A governance token that allows holders to vote on platform decisions

EC-CouncilBlockchain Fintech Certification

Domain 6Objective 2

Cryptocurrency Fundamentals and Wallets BFC Practice Questions (Page 8)

Part of the Digital Currencies and Cryptocurrencies domain, which makes up ~15% of our current practice bank.

49questions here

10free pages

10concepts

Questions 36–40

36application · medium
A financial advisor is helping a client who wants to hold a large amount of cryptocurrency as a long-term investment. The client is concerned about theft from online attacks but also wants to be able to sell quickly if the market moves. Which wallet strategy best balances security and liquidity?
Select an answer first
37application · medium
A blockchain network is experiencing a high number of orphaned blocks due to miners finding blocks at nearly the same time. Which consensus parameter is most likely to reduce the frequency of orphaned blocks?
Select an answer first
38application · medium
A company is considering accepting a cryptocurrency that is a token on the Ethereum network and is pegged 1:1 to the US dollar. The token is used for payments and is backed by reserves held by a central issuer. How should this token be classified?
Select an answer first
39application · medium
A fintech startup is building a non-custodial wallet app. They want users to be able to sign transactions on their own devices without the private key ever leaving the device. Which cryptographic mechanism should the app use to ensure that a transaction is authentic and was not altered in transit?
Select an answer first
40application · medium
A company is creating a token on an existing blockchain like Ethereum to reward customers with loyalty points that can only be used within their own platform. Which type of token should they create?
Select an answer first

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