Quiz: Blockchain Essentials - Software Development MCQ

• A car: A car is considered an asset because it has value and can be sold for a profit.


• A mortgage: A mortgage is not an asset, it is a liability as it represents money owed to a lender.


• A digital music file: A digital music file is not considered an asset in the traditional sense as it does not have tangible value.


• All of the above: The correct answer is all of the above, as a car is an asset, a mortgage is a liability, and a digital music file is not typically considered an asset.

Assets are resources or valuable items that have economic value. They can be owned or controlled to produce value and generate income. In the context of the given examples:

• Car: A car can be considered an asset because it has a resale value and can be used to generate income through services like ride-sharing or rental.


• Mortgage: A mortgage is a liability because it represents a debt owed to a lender for a property purchase. It does not have inherent value like an asset.


• Digital music file: While a digital music file may have personal value, it is not typically considered an asset because it does not have a tangible market value like physical assets.

Understanding the distinction between assets and liabilities is important for financial planning and decision-making, as it helps individuals and businesses assess their financial health and make informed choices about investments and expenditures.

• A ledger describes the inputs and outputs of a business: This is correct. A ledger records all the financial transactions of a business, including inputs and outputs.


• A ledger consists of transactions, often governed by contracts: This is also correct. Transactions in a ledger are often based on contracts or agreements between parties.


• A ledger is used purely for reporting of cash: This statement is not correct. A ledger is used for recording all financial transactions, not just cash transactions. It includes assets, liabilities, revenues, and expenses.


• A ledger is a system of record: This is correct. A ledger serves as a permanent record of all financial transactions and is considered the primary accounting record of a business.

• Consensus: Blockchain technology relies on consensus algorithms to validate transactions, ensuring that all network participants agree on the validity of the data.


• Provenance: The transparent nature of blockchain allows for tracking the origin and history of assets, enhancing trust in the supply chain.


• Immutability: Once data is recorded on a blockchain, it cannot be altered or deleted, providing a high level of security and trust in the integrity of the information.


• Finality: Transactions on a blockchain network are irreversible once confirmed, eliminating the need for intermediaries and reducing the risk of fraud.

These features collectively contribute to building trust among network participants and establishing a reliable and secure business environment.

The negative connotation to them is that they are unregulated, censorship-resistant, shadow currency. This was the first blockchain application.  Many people buy bitcoins for speculation, betting on the price going up. There is also an interesting phenomena in bitcoins: currently, 25 bitcoins are created every ten minutes.

• Shared Ledger: A business blockchain must have a shared ledger that allows multiple parties to have access to the same information, promoting transparency and trust.


• Smart Contract: Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code. They automate and enforce agreements, reducing the need for intermediaries.


• Privacy Services: Privacy services ensure that sensitive information is kept confidential and only accessible to authorized parties, protecting the integrity of the data on the blockchain.


• Trust: Trust is a fundamental requirement for a business blockchain as it relies on the belief that the system is secure, reliable, and operates in the best interest of all participants.

These core requirements are essential for a business blockchain to operate efficiently and effectively, providing a secure and transparent platform for conducting business transactions.

What is a smart contract?

• Definition: A smart contract is a self-executing contract where the terms of the agreement between the buyer and seller are directly written into lines of code.


• Business rules: Smart contracts consist of business rules that are implied by the contract and are embedded in a blockchain.


• Automation: Once the conditions of the contract are met, the smart contract executes automatically without the need for intermediaries.


• Decentralized: Smart contracts run on a decentralized network such as a blockchain, ensuring transparency and security.


• Immutable: Once deployed on the blockchain, smart contracts are immutable and cannot be altered, providing a high level of trust.

• Blockchain captures a record of every committed transaction in chronological order: This statement is true. Blockchain technology stores every transaction in a block, which is linked to the previous block, creating a chain of blocks in chronological order.


• Blockchain adds a cognitive analytics capability to the asset supply chain: This statement is false. While blockchain can enhance transparency and efficiency in the supply chain by providing immutable records of transactions, it does not inherently add cognitive analytics capabilities.


• Blockchain provides a smart contract feature that can be used to model assets of any description: This statement is true. Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code. They can be used to model various assets and automate processes.


• Blockchain can help provide provenance for an asset: This statement is true. By recording each transaction on the blockchain, the provenance of an asset can be traced back to its origin, ensuring authenticity and reducing the risk of counterfeit goods.

Therefore, the false statement is B: Blockchain adds a cognitive analytics capability to the asset supply chain.

• Regulatory Requirements: Compliance ledgers, such as Asset Management, have strict regulatory requirements that can benefit from the transparency and immutability of blockchain technology.


• Efficiency: Blockchain can streamline compliance processes by automating tasks such as record-keeping, auditing, and reporting, reducing the time and resources required for compliance.


• Data Integrity: The tamper-proof nature of blockchain ensures the integrity of compliance data, making it easier to track and verify information throughout its lifecycle.


• Trust and Security: Blockchain provides a secure and transparent way to record and manage compliance data, enhancing trust between stakeholders and reducing the risk of fraud or errors.


• Scalability: Compliance ledger use cases often involve large volumes of data and multiple parties, making blockchain's scalability features beneficial for handling complex compliance processes efficiently.


• Educational Opportunity: Starting with a compliance ledger use case allows organizations to understand the fundamentals of blockchain technology and its potential applications before exploring more complex use cases in the future.

• Efficient Transaction Processing System: Business blockchain can be used to create a more efficient transaction processing system across a business network. This can help streamline operations, reduce costs, and increase transparency and trust among participants.

• Hosting and support with value added services provision: IBM is investing in providing hosting services and support to businesses, along with additional value-added services to meet their needs.


• Making business blockchain real for customers: IBM is focusing on implementing blockchain technology in businesses to make it more efficient and effective for their customers.


• Technology: IBM is contributing to the development of technology that supports business blockchain, ensuring that it is robust and secure for use.

• Cryptocurrency: IBM is not currently investing in the development of a cryptocurrency suitable for business purposes. This is not a focus area for their investment at the moment.