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IGCSE · Practice questions · Digital currency and blockchain

A ledger nobody can edit.

Six original Cambridge-style questions on digital currency and blockchain, with mark-scheme style solutions.

Original questions All questions on this page are original work, written in the Cambridge IGCSE style. They are not from past papers. They test the same concepts and skills the syllabus rewards.
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01
Recall
[1 marks]

State what is meant by a digital currency.

  • A currency that only exists electronically (it has no physical form). ✓
02
Explain
[2 marks]

Describe two ways a digital currency can be used.

  • To pay for goods and services (online or in shops that accept it). ✓
  • To transfer money directly to another person over the internet (from a digital wallet). ✓
03
Explain
[4 marks]

Describe how blockchain is used to track digital currency transactions.

  • Blockchain is a digital ledger / a time-stamped series of records. ✓
  • Each new transaction is checked / verified by computers in the network and added in a new block with a timestamp. ✓
  • Each block stores the hash of the previous block, linking the blocks in a chain. ✓
  • Every computer in the network holds a copy, so all transactions are recorded permanently and can be traced. ✓
04
Explain
[3 marks]

Explain why a transaction recorded in a blockchain cannot be altered.

  • Altering the data in a block changes that block's hash. ✓
  • The next block stores the old hash, so it no longer matches and the chain is broken. ✓
  • The altered copy also differs from the copies held by the other computers, so the change is detected / rejected. ✓
05
Recall
[2 marks]

Identify two items of data stored in each block of a blockchain, other than the transactions.

  • A timestamp. ✓
  • The hash of the block / the hash of the previous block (either). ✓
06
Analysis
[2 marks]

A student says: "Blockchain keeps digital currency safe because it encrypts the money." Explain why this is not an accurate description.

  • Blockchain is a ledger / record of transactions; it does not encrypt the currency. ✓
  • It keeps the currency trustworthy because the time-stamped records cannot be altered without detection. ✓

Mark this once you have attempted all six and checked your working. It records a Practiced badge on the topic and adds a one-time bonus. Revealing the solutions alone does not count.