Fintech | Questions with 100% Verified Answers | Latest Update
2026/2027
Question: What are some issues with the credit rating industry?
Answer: - Can shop around for a good rating
- Incentive to issue higher ratings to maintain customer base as revenue is based on fees
(Moral Hazard)
- Leads to low quality ratings
Question: How does the Blockchain work? What two factors help it work?
Answer: - Uses a digital, decentralized, distributed ledger. Which does not rely on trusted
intermediaries. Instead, trust is distributed across the network and not vested in any single member. Let's
people send assets directly and safely to each other.
- Relies on consensus mechanisms such as proof of work. Also, incentive structures
where selfish choices benefit the network.
Question: List and explain the 5 steps in the Blockchain process
Answer: 1) A transaction is born (no way to reverse)
2) The transaction is sent to a peer-to-peer network (Nodes)
3) Race to create new blocks
- Miners organize valid transactions into a list called block
- To create new blocks must solve computer intensive mathematical puzzle to guess a
number called a nonce, which is combined with other data in the block to create a hash.
4) Completing a new block
- The hash must be valid otherwise try again until someone gets it.
5) Adding a new block to the chain
- Once completed it is sent to the rest of the network to verify.
- Miner is then rewarded (more incentive)
Question: As Bitcoin is anonymous how does one access it?
Answer: Using a public key that is derived from a private key
Question: What was Diem (Libra)? What happened to it?
Answer: It was a non-profit permissioned blockchain project backed intrinsic assets that aimed to bank people
through their mobiles and Facebook. It fell apart due to regulatory problems
Question: What is R3 Corda?
Answer: A permissioned crypto currency started by a consortium of over 100 banks and technology firms. Not
on the Blockchain uses DLT. So, no mining required. Use distributed ledger technology which keeps a complete
record in numerous locations. And trusted intermediaries called notaries validate facts on this immutable
ledger.
Question: How is Ethereum different to Bitcoin?
Answer: It is more expandable, faster, and is not just a medium of payment transactions like Bitcoin
Question: What is an ICO? What is its purpose? Where does the utility stem from?
Answer: - A form of crowdfunding that uses cryptocurrencies. Profit to investors comes through
appreciation in token value
- To enter the market (rather than long term investment like in an IPO)
- Gaining adoption of the coin (rather than dividends such as in an IPO or VC case)
, Question: What is a Token?
Answer: Act as a new currency and proof of contribution to crowd funding that is released to fund the project.
Token has no inherent value but represents certain rights to buyers. Typically created through Ethereum.
Question: What is a Smart Contract?
Answer: An agreement that self-executes without any human intervention. Let's software determine the legal
course of action, whether the action is between people, businesses, or even countries.
Question: List and explain the 3 key reasons that Ethereum's Blockchain is favored over Bitcoin's?
Answer: - Versatile system: Allows for smart contracts that can calculate the amount of funds
raised, verify, and execute transactions, and distribute tokens. Bitcoin's blockchain does not allow for tokens.
- Accurate tracking system: This is essential in an ICO, where the blockchain must be able
to recalculate total contributions after each new investor, close the ICO at certain points, and issue tokens
when conditions are met.
- Speed: Bitcoin's blockchain is very slow, meaning transactions in an ICO would have
taken ages. Ethereum's protocol allows for much easier creation of blocks, speeding up the process.
Question: What are 3 key ways an ICO differs from an IPO or VC?
Answer: - Low protection for investors compared to an IPO/VC
- Open to everyone compared to exclusive IPO/VC
- Weak track record and no regulatory oversight compared to an IPO/VC
Question: What are the 3 roles of money?
Answer: 1) The facilitation of exchange
2) Unit of account
3) Store of value
Question: What is the M1 vs. M2 money supply?
Answer: M1: Coin, currency, demand deposits M2: M1 + Savings deposits, time deposits, certain CDs, money
market deposit accounts, and money market mutual funds
Question: What two problems does non-fintech payment have?
Answer: Slowness and high fees
Question: What is SWIFT?
Answer: Provides a network that enables banks worldwide to send and receive information about financial
transactions. Does NOT facilitate funds transfer, rather it sends payment orders, which must be settled by
corresponding accounts.
Question: What are 3 key reasons for regulation in the Fintech space?
Answer: 1) Increase competition
2) Protect consumers
3) Prevent financial crimes
Question: What is PSD2? Why is it important?
Answer: - Banks are obligated to provide third party providers (TTP) access to their customers'
accounts through APIs.
- This opens up for more competition in the area of payment services. Encouraging new
players into the market with innovative solutions and customer focused services.
2026/2027
Question: What are some issues with the credit rating industry?
Answer: - Can shop around for a good rating
- Incentive to issue higher ratings to maintain customer base as revenue is based on fees
(Moral Hazard)
- Leads to low quality ratings
Question: How does the Blockchain work? What two factors help it work?
Answer: - Uses a digital, decentralized, distributed ledger. Which does not rely on trusted
intermediaries. Instead, trust is distributed across the network and not vested in any single member. Let's
people send assets directly and safely to each other.
- Relies on consensus mechanisms such as proof of work. Also, incentive structures
where selfish choices benefit the network.
Question: List and explain the 5 steps in the Blockchain process
Answer: 1) A transaction is born (no way to reverse)
2) The transaction is sent to a peer-to-peer network (Nodes)
3) Race to create new blocks
- Miners organize valid transactions into a list called block
- To create new blocks must solve computer intensive mathematical puzzle to guess a
number called a nonce, which is combined with other data in the block to create a hash.
4) Completing a new block
- The hash must be valid otherwise try again until someone gets it.
5) Adding a new block to the chain
- Once completed it is sent to the rest of the network to verify.
- Miner is then rewarded (more incentive)
Question: As Bitcoin is anonymous how does one access it?
Answer: Using a public key that is derived from a private key
Question: What was Diem (Libra)? What happened to it?
Answer: It was a non-profit permissioned blockchain project backed intrinsic assets that aimed to bank people
through their mobiles and Facebook. It fell apart due to regulatory problems
Question: What is R3 Corda?
Answer: A permissioned crypto currency started by a consortium of over 100 banks and technology firms. Not
on the Blockchain uses DLT. So, no mining required. Use distributed ledger technology which keeps a complete
record in numerous locations. And trusted intermediaries called notaries validate facts on this immutable
ledger.
Question: How is Ethereum different to Bitcoin?
Answer: It is more expandable, faster, and is not just a medium of payment transactions like Bitcoin
Question: What is an ICO? What is its purpose? Where does the utility stem from?
Answer: - A form of crowdfunding that uses cryptocurrencies. Profit to investors comes through
appreciation in token value
- To enter the market (rather than long term investment like in an IPO)
- Gaining adoption of the coin (rather than dividends such as in an IPO or VC case)
, Question: What is a Token?
Answer: Act as a new currency and proof of contribution to crowd funding that is released to fund the project.
Token has no inherent value but represents certain rights to buyers. Typically created through Ethereum.
Question: What is a Smart Contract?
Answer: An agreement that self-executes without any human intervention. Let's software determine the legal
course of action, whether the action is between people, businesses, or even countries.
Question: List and explain the 3 key reasons that Ethereum's Blockchain is favored over Bitcoin's?
Answer: - Versatile system: Allows for smart contracts that can calculate the amount of funds
raised, verify, and execute transactions, and distribute tokens. Bitcoin's blockchain does not allow for tokens.
- Accurate tracking system: This is essential in an ICO, where the blockchain must be able
to recalculate total contributions after each new investor, close the ICO at certain points, and issue tokens
when conditions are met.
- Speed: Bitcoin's blockchain is very slow, meaning transactions in an ICO would have
taken ages. Ethereum's protocol allows for much easier creation of blocks, speeding up the process.
Question: What are 3 key ways an ICO differs from an IPO or VC?
Answer: - Low protection for investors compared to an IPO/VC
- Open to everyone compared to exclusive IPO/VC
- Weak track record and no regulatory oversight compared to an IPO/VC
Question: What are the 3 roles of money?
Answer: 1) The facilitation of exchange
2) Unit of account
3) Store of value
Question: What is the M1 vs. M2 money supply?
Answer: M1: Coin, currency, demand deposits M2: M1 + Savings deposits, time deposits, certain CDs, money
market deposit accounts, and money market mutual funds
Question: What two problems does non-fintech payment have?
Answer: Slowness and high fees
Question: What is SWIFT?
Answer: Provides a network that enables banks worldwide to send and receive information about financial
transactions. Does NOT facilitate funds transfer, rather it sends payment orders, which must be settled by
corresponding accounts.
Question: What are 3 key reasons for regulation in the Fintech space?
Answer: 1) Increase competition
2) Protect consumers
3) Prevent financial crimes
Question: What is PSD2? Why is it important?
Answer: - Banks are obligated to provide third party providers (TTP) access to their customers'
accounts through APIs.
- This opens up for more competition in the area of payment services. Encouraging new
players into the market with innovative solutions and customer focused services.
