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

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Prepare for the Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification. Enhance your readiness with flashcards and multiple-choice questions, each supported by hints and explanations. Gear up for your exam!

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What is the primary difference between a native cryptocurrency and a token?

Tokens cannot be exchanged for real-world currency, whereas native cryptocurrency can.
Tokens are built on an existing blockchain, whereas cryptocurrency is native to the blockchain.
One is backed by real-world value, whereas the other is not.
Tokens cannot be used for investment purposes, whereas cryptocurrency can.

The correct answer is: Tokens are built on an existing blockchain, whereas cryptocurrency is native to the blockchain.

The primary difference between a native cryptocurrency and a token is that tokens are built on an existing blockchain, while native cryptocurrencies are inherent to their own blockchain. Native cryptocurrencies, like Bitcoin or Ether, operate on their respective blockchains and are integral to the functioning of that blockchain, providing the necessary infrastructure for transactions, smart contracts, and security. On the other hand, tokens are created on existing blockchains through standardized protocols (such as ERC-20 for Ethereum) and represent various assets or utilities that can operate within that blockchain's environment. This distinction is crucial for understanding the broader crypto ecosystem, as it highlights how various digital assets interact with blockchain technology in different ways.