ACCA Strategic Business Leader (SBL) Practice Exam

What is the primary characteristic of blockchain technology?

1. A decentralized digital sequence of records

2. A centralized ledger controlled by a single entity

3. An unchangeable record maintained by government institutions

4. A digital storage system that is easily altered

The correct answer is: A decentralized digital sequence of records

The primary characteristic of blockchain technology is its decentralized nature. This decentralization means that the control and decision-making processes are distributed across a network of participants rather than being held by a single entity or authority. Each participant has access to a copy of the entire blockchain, which enhances transparency and security since no single party can manipulate the records unilaterally. In blockchain, records, or blocks, are linked in chronological order, forming a chain of data that is visible to all participants in the network. This structure not only allows for real-time updates and validation of transactions but also ensures that any changes to the data require consensus from a majority of the network, making it resistant to tampering and fraud. Therefore, the decentralized digital sequence of records is what fundamentally distinguishes blockchain technology from traditional databases or record-keeping systems. In contrast, other options describe characteristics that do not align with the core principles of blockchain. A centralized ledger would negate the decentralization aspect, while an unchangeable record maintained solely by government institutions does not capture the distributed control and consensus mechanism integral to blockchain. Similarly, a digital storage system that is easily altered lacks the security and integrity that blockchain provides, making the chosen option the most accurate representation of blockchain technology.