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Date May 2018 Marks available 2 Reference code 18M.1.SL.TZ0.2
Level SL Paper 1 Time zone no time zone
Command term Identify Question number 2 Adapted from N/A

Question

Digital currency

Bitcoin is a type of digital currency (cryptocurrency). This is money that can be sent via the internet and exchanged for goods, services, or money in different currencies. Users can buy bitcoins using real money, and bitcoins can either be spent or stored in a digital wallet for later use. Bitcoins can be used in every country, and sending bitcoins is as simple as sending an email.

A bitcoin wallet is an application that can be installed on a computer or mobile device. Once a bitcoin wallet is installed, the user will get a bitcoin address to use when transferring bitcoins to and from the wallet. This transfer uses private and public key encryption. Users should have a strong password to access their bitcoin wallet.

Bitcoin operates on a peer-to-peer (P2P) network, and users of bitcoins are identified by their bitcoin address. Some users of bitcoins wish to remain anonymous, but this is not always possible.

Identify two characteristics of a peer-to-peer (P2P) network.

[2]
a.i.

Identify two characteristics of a strong password.

[2]
a.ii.

The use of a password is one method of authentication.

Identify two other methods of authentication.

[2]
a.iii.

Explain one reason why bitcoin makes use of encryption when transmitting data.

[2]
b.i.

Explain one reason why it may be difficult to ensure the security of information in a large peer-to-peer network such as bitcoin.

[2]
b.ii.

Some users of bitcoins are concerned that their anonymity may be compromised by their bitcoin address.

Explain one way in which a bitcoin address may be used to reveal information about a bitcoin user.

[2]
b.iii.

Bitcoin transactions are made between individuals without the knowledge of banks, governments, or credit card companies. Some governments are investigating whether they should regulate digital transactions, such as those made using bitcoins.

To what extent is it appropriate for governments to regulate digital transactions, such as those made using bitcoins?

[8]
c.

Markscheme

Answers may include:


Award [1] mark for identifying each characteristic of a peer-to-peer network up to a maximum of [2] marks.

a.i.

Answers may include:


Award [1] mark for identifying each characteristic of a strong password up to a maximum of [2] marks.

a.ii.

Answers may include:


Award [1] mark for identifying each additional method of authentication up to a maximum of [2] marks.

a.iii.

Answers may include:


Award [1] for the reason why encryption is used when transmitting data and an additional [1] for the explanation up to a maximum of [2].

b.i.

Answers may include:


Award [1] for the reason why the security of information may be difficult to maintain in a large peer-to-peer network such as bitcoin and an additional [1] for the explanation up to a maximum of [2].

b.ii.

Answers may include:


Award [1] for identifying how a bitcoin address may be used to reveal the name of a bitcoin user and an additional [1] for the explanation up to a maximum of [2] marks.

b.iii.

Answers may include:

 

In part (c) of this question it is expected there will be a balance between the terminology related to digital systems and the terminology related to social and ethical impacts.

Keywords: laws, regulations, environment, cryptocurrency, privacy, anonymity, surveillance, change, power, systems, values

 

Refer to SL/HL paper 1, part c markbands when awarding marks. These can be found under the "Your tests" tab > supplemental materials > Digital society markbands and guidance document.

c.

Examiners report

[N/A]
a.i.
[N/A]
a.ii.
[N/A]
a.iii.
[N/A]
b.i.
[N/A]
b.ii.
[N/A]
b.iii.
[N/A]
c.

Syllabus sections

Topic 3: Content » 3.4 Networks and the internet
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Topic 3: Content

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