Risk Management in Blockchain Finance BFC Practice Questions (Page 10)

Questions 46–50

1. 46application · medium

   A global remittance service uses a public blockchain to process cross-border payments. They are concerned about data privacy regulations, such as GDPR, because transaction data is visible on-chain. Which approach would BEST address privacy concerns while maintaining the benefits of a public blockchain?

   • AStore all transaction data on-chain in an encrypted format.
   • BRemove all transaction history from the blockchain after a certain period.
   • CUse a zero-knowledge proof (ZKP) system to validate transactions without revealing the underlying data.
   • DSwitch to a private blockchain that is not accessible to the public.
   Reveal Solution Discussion Select an answer first
2. 47application · medium

   A global crypto exchange is subject to GDPR in Europe and is considering storing customer transaction data on a public blockchain. What is the primary regulatory risk they must address?

   • AThe blockchain is too slow to process transactions.
   • BThe blockchain cannot be accessed by regulators.
   • CThe immutability of the blockchain may conflict with the right to erasure under GDPR.
   • DThe blockchain is not secure enough for financial data.
   Reveal Solution Discussion Select an answer first
4. 48application · medium

   A decentralized exchange (DEX) relies on an oracle to fetch the price of an asset for liquidations. The oracle is a single third-party service. What is the most significant risk this creates, and what is the best mitigation?

   • AOracle manipulation could cause incorrect liquidations; use a decentralized oracle network with multiple data sources.
   • BThe oracle might be expensive; use a free public API.
   • CThe oracle might be slow; use a faster centralized oracle.
   • DThe oracle might be hacked; use a hardware security module.
   Reveal Solution Discussion Select an answer first
5. 49expert · hard

   A DAO manages a large treasury and has a governance process that requires a 7-day delay between a successful vote and the execution of the proposal. A proposal to invest in a high-risk token passes, but the token's price crashes before the execution delay ends. The DAO wants to cancel the proposal. What is the best course of action?

   • AUse the DAO's emergency pause or cancel mechanism if one exists, to prevent execution.
   • BAttempt to reverse the transaction after execution.
   • CLet the proposal execute because the vote already passed.
   • DSell the treasury assets to offset the potential loss.
   Reveal Solution Discussion Select an answer first
6. 50application · medium

   A consortium blockchain is governed by five member banks. Each bank runs a node. A critical smart contract needs to be upgraded, but the governance rules require a unanimous vote. One bank is unresponsive due to a technical outage. What is the most significant operational risk in this scenario?

   • AThe other banks can proceed without the unresponsive bank's vote.
   • BThe unresponsive bank's node will be permanently removed from the network.
   • CThe smart contract will automatically upgrade itself.
   • DThe upgrade is delayed, potentially leaving a known vulnerability unpatched.
   Reveal Solution Discussion Select an answer first