FinTech Test 1 Practice Questions &
answers rated A+ passed
Why did Satoshi Nakamoto design Bitcoin? - correct answer ✔✔ *To allow two willing parties to
transact directly without the need for a trusted third party.
*To create a payments system that wasn't reversible.
*To solve the double spending problem by using a peer-to-peer network.
What happens if the owner of a Bitcoin loses their private key? - correct answer ✔✔ They won't
be able to recover the Bitcoin.
What would fractional reserve banking in a cryptocurrency do? - correct answer ✔✔ It could
increase the purchasing power of the cryptocurrency (deflation) and eliminate traditional banks
(new banks may need to develop).
What is the claim that blockchains are tamperproof and immutable based on? - correct answer
✔✔ The cost of rewriting all subsequent blocks would exceed the economic benefits.
What is the most important difference between Bitcoin and Ethereum? - correct answer ✔✔
Ethereum's blockchain is designed to run smart contracts (applications running exactly as
programmed).
How many transactions can Visa handle per second? - correct answer ✔✔ 24,000
How many transactions can Bitcoin handle per second? - correct answer ✔✔ 7
, Which is true about initial coin offerings? - correct answer ✔✔ *They're issued by startups
instead of mature companies.
*They involve the presale of a product to be developed.
*They occur on a blockchain.
Which is an advantage to selling utility tokens? - correct answer ✔✔ They effectively amount to
the presale of the issuer's forthcoming product.
What was the status of ICO's as of March 2018? - correct answer ✔✔ The question of when ICO
issuance becomes a securities offering had not been settled in court.
How can an entrepreneur encourage an investor to provide funding on more favorable terms? -
correct answer ✔✔ *Provide more relevant information to the investors.
*Give the investor greater governance power over management.
What did Robert Merton say about financial crises? - correct answer ✔✔ *Trust is overrated
*They can hurt financial innovation (ex. Great Recession)
*They can spur innovation (ex. the 1970's)
Who did people in the retail financial space lose trust in? - correct answer ✔✔ Regulators
(explicitly stated)
MAYBE institutions and intermediaries, too.
What did Merton say about lost trust? - correct answer ✔✔ It can only be partially won back
through technologies such as blockchain.
What happened in the 1970's? - correct answer ✔✔ Stagflation
(Inflation + High Unemployment + Slow Economic Growth)
answers rated A+ passed
Why did Satoshi Nakamoto design Bitcoin? - correct answer ✔✔ *To allow two willing parties to
transact directly without the need for a trusted third party.
*To create a payments system that wasn't reversible.
*To solve the double spending problem by using a peer-to-peer network.
What happens if the owner of a Bitcoin loses their private key? - correct answer ✔✔ They won't
be able to recover the Bitcoin.
What would fractional reserve banking in a cryptocurrency do? - correct answer ✔✔ It could
increase the purchasing power of the cryptocurrency (deflation) and eliminate traditional banks
(new banks may need to develop).
What is the claim that blockchains are tamperproof and immutable based on? - correct answer
✔✔ The cost of rewriting all subsequent blocks would exceed the economic benefits.
What is the most important difference between Bitcoin and Ethereum? - correct answer ✔✔
Ethereum's blockchain is designed to run smart contracts (applications running exactly as
programmed).
How many transactions can Visa handle per second? - correct answer ✔✔ 24,000
How many transactions can Bitcoin handle per second? - correct answer ✔✔ 7
, Which is true about initial coin offerings? - correct answer ✔✔ *They're issued by startups
instead of mature companies.
*They involve the presale of a product to be developed.
*They occur on a blockchain.
Which is an advantage to selling utility tokens? - correct answer ✔✔ They effectively amount to
the presale of the issuer's forthcoming product.
What was the status of ICO's as of March 2018? - correct answer ✔✔ The question of when ICO
issuance becomes a securities offering had not been settled in court.
How can an entrepreneur encourage an investor to provide funding on more favorable terms? -
correct answer ✔✔ *Provide more relevant information to the investors.
*Give the investor greater governance power over management.
What did Robert Merton say about financial crises? - correct answer ✔✔ *Trust is overrated
*They can hurt financial innovation (ex. Great Recession)
*They can spur innovation (ex. the 1970's)
Who did people in the retail financial space lose trust in? - correct answer ✔✔ Regulators
(explicitly stated)
MAYBE institutions and intermediaries, too.
What did Merton say about lost trust? - correct answer ✔✔ It can only be partially won back
through technologies such as blockchain.
What happened in the 1970's? - correct answer ✔✔ Stagflation
(Inflation + High Unemployment + Slow Economic Growth)
