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

Which statement is true regarding Bitcoin (BTC) transactions?

1. BTC cannot be spent without possessing the private key

2. BTC cannot be reversed, canceled, or charged back

3. BTC cannot be validated through blockchains

4. BTC cannot be divided into smaller units

The correct answer is: BTC cannot be reversed, canceled, or charged back

The statement that Bitcoin (BTC) transactions cannot be reversed, canceled, or charged back is accurate and reflects a fundamental characteristic of Bitcoin and other cryptocurrencies. Once a transaction is confirmed on the blockchain, it becomes immutable, meaning that it cannot be altered or undone. This immutability is a significant feature of blockchain technology, designed to enhance security and trust in digital transactions. Unlike traditional banking transactions, which can be reversed or canceled under certain conditions, Bitcoin transactions are final once included in a block and confirmed by network participants. This characteristic can be particularly important for users to understand, as it emphasizes the need for caution and due diligence before initiating transactions, as there is no recourse to reclaim funds sent in error. The other statements present misunderstandings about Bitcoin's operational mechanics. Bitcoin indeed requires possession of the private key to access and spend the associated funds, it is validated through a decentralized network of nodes that reach consensus on the blockchain, and it can be divided into smaller units known as satoshis, with one Bitcoin being equal to 100 million satoshis. Understanding these truths enhances the comprehension of how Bitcoin operates within the wider financial ecosystem and the implications for anti-financial crime measures.