Financial Blockchain Business Models BFC Practice Questions (Page 5)

Questions 21–25

1. 21foundation · easy

   How do blockchain platforms create network effects?

   • ABy increasing the value of the platform as more users join and interact
   • BBy limiting the number of users to maintain exclusivity
   • CBy keeping the platform closed to third-party developers
   • DBy requiring users to pay high fees to join
   Reveal Solution Discussion Select an answer first
2. 22expert · hard

   A central bank is evaluating a wholesale central bank digital currency (CBDC) for interbank settlement. The CBDC would run on a permissioned blockchain and be available only to commercial banks. The central bank's goals are to reduce settlement risk and improve liquidity management. However, some commercial banks are concerned about losing control over their liquidity and being dependent on the central bank's infrastructure. Which design choice best addresses the central bank's goals while mitigating the banks' concerns?

   • AImplement the CBDC with programmability features that allow banks to automate liquidity management while maintaining a shared, real-time ledger
   • BLimit the CBDC to large banks only to reduce complexity
   • CUse a public blockchain to increase transparency and reduce central bank control
   • DAllow each bank to run its own independent ledger and reconcile periodically
   Reveal Solution Discussion Select an answer first
4. 23expert · hard

   A large bank is considering two blockchain-based solutions for its cross-border payment business. Option A is a private permissioned network with a small number of trusted correspondent banks, offering high throughput and low per-transaction fees. Option B is a public blockchain with a native token, offering open access and potential network effects but with variable transaction fees and slower settlement. The bank's priorities are predictable costs and regulatory compliance. Which option is more aligned with the bank's priorities?

   • AOption B, because public blockchains always have lower fees
   • BOption A, because permissioned networks are always more secure than public blockchains
   • COption A, because a permissioned network provides controlled access and predictable transaction costs
   • DOption B, because public blockchains are inherently more compliant due to transparency
   Reveal Solution Discussion Select an answer first
5. 24foundation · easy

   How has blockchain been applied in the insurance industry as a business model?

   • AThrough smart contracts that automate claims processing and payouts
   • BThrough the elimination of all insurance policies
   • CThrough the use of paper-based policies and manual underwriting
   • DThrough the use of centralized databases for policy management
   Reveal Solution Discussion Select an answer first
6. 25application · medium

   A startup plans to issue a token that gives holders the right to receive a portion of the platform's quarterly profits. The startup wants to avoid securities regulation by calling the token a 'utility token' and framing it as a prepaid service credit. Which regulatory reality should the startup consider?

   • AProfit-sharing tokens are always classified as commodities, not securities.
   • BRegulators look at the economic substance, not the label, so profit-sharing likely makes it a security.
   • CCalling it a utility token automatically exempts it from securities laws.
   • DSecurities regulation only applies if the token is traded on a public exchange.
   Reveal Solution Discussion Select an answer first