ITPEC FE Morning April 2023 Question 71

Which of the following is an explanation of cryptocurrency mining that is enabled by block chain?

a)Making payments or settlements by using cryptocurrency in brick-and-mortar storesb)Obtaining capital gain by buying and selling cryptocurrencyc)Obtaining cryptocurrency as a reward for participation in checking or record calculation of cryptocurrency transactionsd)Transferring money to an individual or organization in cryptocurrency

Explanation

Earning cryptocurrency as a reward for verifying and recording transactions — mining is the work that keeps a blockchain ledger up to date.

New transactions are collected into a block, and participants (miners) compete to validate it; under proof of work they search for a nonce that makes the block's hash meet a difficulty target. The first to succeed adds the block to the chain, the others check it, and the winner receives newly issued cryptocurrency plus transaction fees. The reward keeps enough participants verifying the ledger without a central administrator.

Answer (c)

Why not others:

•(a) — paying in a physical store is using cryptocurrency as a means of payment
•(b) — buying and selling for capital gains is trading or investment
•(d) — sending cryptocurrency to someone is a remittance, one of the transactions miners verify, not mining itself

Key rule: Mining is paid validation work: participants verify transactions and record them in blocks, and new coins and fees are their reward.

Business Industry · AI-written, may contain errors

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