Eccouncil EC-Council Blockchain Fintech Certification (BFC) 312-82 Exam Practice Test

Answer : D

Tree Chains modify the standard blockchain structure from a linear sequence to a tree-like structure, where blocks can have multiple branches instead of forming a single sequential chain. This structure can improve scalability and enable parallel processing, as multiple chains can be validated simultaneously.

Key Details:

Tree Structure: In tree chains, blocks can have multiple child blocks, which allows transactions to be processed across several branches concurrently. This reduces bottlenecks associated with linear block validation and enhances throughput.

Benefits Over Linear Chains: Traditional blockchain models process blocks in a strict sequence. Tree chains allow for more flexibility and higher transaction throughput, as multiple blocks can be validated simultaneously across different branches.

Use Cases: This structure is advantageous for complex applications that require parallel transaction processing, such as large-scale blockchain networks or systems needing high transaction speeds.

Thus, D. Tree chains is the correct answer, as it refers to the blockchain model that diverges from a linear structure.

Answer : C

Distributed Ledger Technology (DLT) is a broad term used to describe technologies that store, distribute, and facilitate the exchange of value between users, either privately or publicly. DLT encompasses various types of ledgers, including blockchains, where data is replicated, shared, and synchronized across a distributed network.

Key Details:

Definition and Scope: DLT refers to a digital system for recording transactions across multiple locations simultaneously. It allows for decentralized data management and reduces the need for a central authority to maintain a ledger.

Private and Public Ledgers: DLT can be implemented in both private (permissioned) and public (permissionless) networks. In public DLT, anyone can participate, while private DLT restricts access to authorized participants only.

Examples of DLT: Blockchain is one form of DLT, but other types include Directed Acyclic Graphs (DAGs) and Hashgraph. Each of these has unique mechanisms for data storage and consensus.

Therefore, C. DLT is the correct answer, as it is the term that broadly covers technologies used for the exchange and storage of value in distributed systems.

Answer : A

FinCEN requires money transmitters and companies involved in virtual currency (CVC) transmission to report suspicious transactions as part of their anti-money laundering (AML) responsibilities. This is in addition to maintaining an effective AML program and registering as a money service business (MSB).

Key Details:

AML Program: The program must be reasonably designed to detect and prevent the use of financial services for money laundering or terrorist financing.

Reporting Suspicious Activity: FinCEN mandates that companies must file Suspicious Activity Reports (SARs) for any transactions that appear to be potentially suspicious or indicative of illegal activities.

Regulatory Compliance: This requirement ensures that businesses adhere to federal regulations, contributing to a secure financial system by monitoring and reporting illicit activity.

Therefore, A. Report suspicious transactions is the correct answer, as this is a key requirement for companies under FinCEN's regulations regarding money transmission and virtual currencies.

Answer : D

When you purchase bitcoins, they are stored in a bitcoin wallet. A bitcoin wallet is a digital tool that stores the cryptographic keys necessary to access and manage your Bitcoin holdings. It does not store physical bitcoins but instead holds the keys to access them on the blockchain.

Key Details:

Functionality of Bitcoin Wallets: Bitcoin wallets manage private and public keys. The private key is required to sign transactions, while the public key generates addresses that allow for receiving bitcoins. Without access to the private key, the user cannot spend or transfer their bitcoins.

Types of Bitcoin Wallets: Wallets can be software-based (such as mobile or desktop apps) or hardware-based (physical devices like a Ledger or Trezor). There are also online (custodial) wallets provided by exchanges, but these still technically store bitcoins within a wallet.

Not a Physical Storage: Bitcoins do not exist as physical files or objects. The wallet is an interface that interacts with the blockchain, where the actual records of ownership are maintained.

Thus, D. In a bitcoin wallet is the correct answer, as bitcoins are stored in wallets that hold the keys necessary to interact with the Bitcoin blockchain.

Answer : C

A Type II DApp is characterized by utilizing another blockchain, such as Ethereum, as its underlying platform. Type II DApps generally operate as protocols or platforms themselves and rely on a foundational blockchain (Type I) for their infrastructure. This categorization enables Type II DApps to leverage the security, decentralization, and functionality of the underlying blockchain while adding unique features or protocols.

Key Details:

Relationship with Type I DApps: Type I DApps are foundational platforms with their own blockchain, such as Ethereum. Type II DApps are built on these foundational platforms, creating additional protocols or applications that depend on the Type I blockchain.

Examples of Type II DApps: Protocols like the ERC-20 token standard on Ethereum are examples of Type II DApps, as they rely on Ethereum's blockchain but provide their own set of functionalities that can be used by other applications.

Benefits of Using Existing Blockchains: By using established blockchains, Type II DApps benefit from existing infrastructure and security while extending the blockchain's capabilities.

Therefore, C. Type II is the correct answer, as it represents DApps built on another blockchain like Ethereum.

Answer : C

According to the Financial Crimes Enforcement Network (FinCEN), the obligations of money transmitters are determined primarily by the business model of the company. FinCEN regulations stipulate that companies engaged in money transmission services must comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations, based on how they conduct their business rather than on their industry designation or self-description.

Key Details:

Regulatory Basis: FinCEN's guidelines are focused on the activities of the business---specifically, whether it facilitates the transfer of money or currency on behalf of others. This regulatory approach ensures that companies involved in money transmission are subject to appropriate oversight, regardless of their industry.

Activities Over Labels: Even if a company does not advertise itself as a money transmitter, it may still be subject to FinCEN regulations if its business operations fit the criteria for money transmission services.

Compliance Requirements: Money transmitters must register with FinCEN and implement AML/CTF measures to prevent illicit activities, aligning their compliance obligations with the nature of their operations.

Thus, C. The business model is the correct answer, as FinCEN focuses on the activities a company performs when determining regulatory obligations.

Answer : C

Blockchain can greatly benefit the food industry by making transactions more transparent. By recording each transaction in an immutable ledger, blockchain enables traceability, which is crucial for food safety, quality control, and ensuring that products meet regulatory standards.

Key Details:

Traceability: Blockchain allows for the tracking of food products from farm to table. Each step in the supply chain can be recorded on the blockchain, providing consumers and regulators with transparent information about the origin and journey of food products.

Improving Trust and Safety: With transparent transactions, stakeholders can quickly identify and address issues such as contamination, fraud, or mislabeling, which enhances food safety and consumer trust.

Enhanced Efficiency: By reducing paperwork and enabling digital record-keeping, blockchain streamlines the process of verifying and sharing information about food products across various parties.

Thus, C. Making transactions more transparent is the correct answer, as it highlights blockchain's role in providing transparency in the food industry.