A financial institution is implementing a cross-chain interoperability solution using a relay chain. The relay chain requires validators to submit block headers from both connected chains. The institution is concerned about the cost of running the relay chain and the potential for validators to collude. What is the most effective way to mitigate the collusion risk?

Use a single trusted validator to reduce the number of parties that could collude

Increase the block time on the relay chain to give validators more time to verify headers

Use a notary scheme instead of a relay chain to avoid the need for validators

Require validators to stake a significant amount of collateral that can be slashed if they submit invalid headers

What is the role of ISO 20022 in the context of financial interoperability?

It is a blockchain protocol for cross-chain asset transfers

It is a regulatory framework for cryptocurrency exchanges

It is a global standard for financial messaging that enables consistent data exchange between financial institutions

It is a cryptographic algorithm used to secure blockchain transactions

What is the primary purpose of blockchain interoperability in the context of financial infrastructure?

To enable different blockchain networks to share data and transfer assets seamlessly

To replace all existing financial systems with a single unified blockchain

To ensure that all blockchains use the same consensus algorithm

To increase the transaction speed of a single blockchain network

A bank wants to use blockchain to streamline its internal reconciliation process between different departments that use different ledgers. The bank's ledgers are all private and permissioned. Which type of interoperability is most relevant?

On-chain interoperability within a single ledger.

Protocol interoperability using ISO 20022.

Off-chain interoperability with external systems.

Cross-chain interoperability between the different private ledgers.

What is the primary function of a hashed timelock contract (HTLC) in cross-chain communication?

To ensure that a transaction is either fully executed or fully refunded after a timeout

To enable a trusted third party to validate transactions

To increase the block size of a blockchain

To provide a permanent record of all cross-chain transactions

EC-CouncilBlockchain Fintech Certification

Domain 7Objective 1

Interoperability in Blockchain Systems BFC Practice Questions (Page 7)

Part of the Blockchain Integration in Financial Infrastructure domain, which makes up ~9% of our current practice bank.

44questions here

9free pages

7concepts

Questions 31–35

31expert · hard
A financial institution is implementing a cross-chain interoperability solution using a relay chain. The relay chain requires validators to submit block headers from both connected chains. The institution is concerned about the cost of running the relay chain and the potential for validators to collude. What is the most effective way to mitigate the collusion risk?
Select an answer first
32foundation · easy
What is the role of ISO 20022 in the context of financial interoperability?
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33foundation · easy
What is the primary purpose of blockchain interoperability in the context of financial infrastructure?
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34application · medium
A bank wants to use blockchain to streamline its internal reconciliation process between different departments that use different ledgers. The bank's ledgers are all private and permissioned. Which type of interoperability is most relevant?
Select an answer first
35foundation · easy
What is the primary function of a hashed timelock contract (HTLC) in cross-chain communication?
Select an answer first

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