Certified Bitcoin Professional 2025 – 400 Free Practice Questions to Pass the Exam

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What is a smart contract?

A digital agreement enforced by blockchain technology

A smart contract is a digital agreement that is enforced by blockchain technology. It operates on the principles of automation and self-execution, allowing contracts to be written in code and run on the blockchain without the need for intermediaries. These contracts automatically enforce and execute the terms agreed upon by the parties involved when certain conditions are met. This system not only enhances security and trust among parties but also reduces the costs and time associated with traditional contract enforcement.

In this context, the other options do not accurately define what a smart contract is. A cryptocurrency wallet is a tool for storing and managing digital currencies, a mathematical algorithm for mining refers to the complex processes used in validating transactions and adding new blocks to a blockchain, and a method for trading cryptocurrencies describes the various ways of buying, selling, or exchanging cryptocurrencies but is not directly related to the functionalities of smart contracts.

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A type of cryptocurrency wallet

A mathematical algorithm for mining

A method for trading cryptocurrencies

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