Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What type of blockchain is characterized as decentralized, democratized, and authority-free?

1. A public blockchain

2. A private blockchain

3. A cryptographic signature

4. A decentralized finance

The correct answer is: A public blockchain

A public blockchain is characterized as decentralized, democratized, and authority-free because it is designed to be open and accessible to anyone who wants to participate. In a public blockchain, all transactions are visible to all participants, and anyone can join the network, validate transactions, and contribute to the maintenance of the blockchain. This openness fosters a trustless environment where there is no need for a central authority to manage or control the network. The decentralization aspect ensures that no single entity has control over the blockchain, which enhances security and reduces the risk of manipulation. Additionally, because participants can freely access and interact with the network, it is democratized, allowing for a diverse range of users to engage in the ecosystem, regardless of their background or status. In contrast, private blockchains are restricted to specific users or organizations and often have a central authority overseeing their operations, which contradicts the principles of decentralization and democratization. Cryptographic signatures refer to security mechanisms used within blockchains, and decentralized finance, while related to blockchain applications, does not represent a type of blockchain in itself.