Limitations of Smart Contracts: Understanding the Constraints

Question 1

Which of the following is a key limitation of smart contracts, rendering them unalterable once deployed?

Accepted Answer

Immutability

Answer

Transparency

Answer

Security

Answer

Cost-effectiveness

Question 2

Complexity in smart contracts can lead to what potential risk?

Accepted Answer

Increased likelihood of bugs and errors

Answer

Reduced efficiency and performance

Answer

Limitation on contract size and functionality

Answer

Difficulty in managing multiple contracts simultaneously

Question 3

Which of the following is NOT considered a limitation of smart contracts?

Accepted Answer

Ease of modification and adaptability

Answer

Lack of a standardized legal framework

Answer

Vulnerability to external attacks and exploits

Answer

Potential for loss of funds due to vulnerabilities

Question 4

Smart contracts are immutable primarily due to which reason?

Accepted Answer

Once deployed, they cannot be changed, enforcing the terms of the agreement

Answer

They are stored on a distributed ledger, ensuring data integrity

Answer

They are enforced by the code itself, making alterations impossible

Answer

They are protected by advanced cryptography, preventing unauthorized modifications

Question 5

Which of the following factors can contribute to the overall complexity of smart contracts?

Accepted Answer

All of the above, as complexity arises from a combination of factors

Answer

Nested dependencies among different contract components

Answer

Conditional logic and intricate decision-making processes

Answer

Complex data structures, requiring advanced handling techniques

Question 6

Which industries are actively exploring and implementing the potential benefits of smart contracts?

Accepted Answer

All of the above, as smart contracts find applications across various industries

Answer

Finance and banking, seeking to streamline transactions and enhance security

Answer

Supply chain management, aiming to improve transparency and traceability

Answer

Healthcare, exploring applications in secure medical data management

Question 7

Which of the following is a fundamental limitation of smart contracts?

Accepted Answer

Immutability

Answer

Simplicity

Answer

Guaranteed security

Answer

Unlimited versatility

Question 8

What is a primary limitation of smart contracts resulting from their immutable nature?

Accepted Answer

Smart contracts cannot be altered after deployment.

Answer

Smart contracts are vulnerable to hacking and exploitation.

Answer

Smart contracts are overly complex to comprehend and utilize.

Answer

Smart contracts lack legal enforceability.

Question 9

The immutability of smart contracts presents challenges in:

Accepted Answer

Responding to changes in business requirements

Answer

Improving contract security

Answer

Lowering transaction costs

Answer

Enforcing legal agreements

Question 10

The complexity of smart contracts arises primarily because they require:

Accepted Answer

Precise definition and codification of intricate business logic

Answer

Compatibility across different blockchain platforms

Answer

Support for high transaction volumes

Answer

Integration with legacy systems

Question 11

The limitation of smart contracts being unsuitable for certain applications arises because they:

Accepted Answer

Lack the flexibility to adapt to evolving circumstances

Answer

Can only operate on a specific blockchain

Answer

Are slow and inefficient

Question 12

Which of the following techniques can help mitigate the immutability limitation of smart contracts?

Accepted Answer

Utilizing proxy contracts

Answer

Performing hard forks

Answer

Directly modifying smart contracts

Answer

Applying software updates

Question 13

Smart contract complexity can be reduced by:

Accepted Answer

Employing high-level programming languages

Answer

Increasing the number of code lines

Answer

Developing custom-built solutions

Answer

Adding unnecessary features

Question 14

Which practice can help prevent bugs in smart contracts?

Accepted Answer

Rigorous unit testing

Answer

Integration of untested code libraries

Answer

Reliance on untested third-party code

Answer

Ignoring independent security audits

Question 15

The immutability of smart contracts can lead to:

Accepted Answer

Irreversible errors and vulnerabilities

Answer

Enhanced contract flexibility

Answer

Increased contract reliability

Answer

Reduced transaction fees

Question 16

Which of the following is NOT a limitation of smart contracts, making them vulnerable to security breaches?

Accepted Answer

Flexibility and adaptability to changing requirements

Answer

Impossibility of modifying code after deployment

Answer

Potential for logical errors and vulnerabilities

Question 17

A smart contract is designed to automate the transfer of funds based on the price of a specific cryptocurrency. However, the contract fails to handle a sudden spike in price, leading to unintended consequences. This scenario exemplifies which limitation of smart contracts?

Accepted Answer

Limited ability to handle complex or dynamic conditions

Answer

Lack of regulatory oversight and legal clarity

Answer

Difficulty in debugging and auditing smart contracts

Question 18

Smart contracts are considered 'immutable' primarily because:

Accepted Answer

Their code cannot be changed once deployed on a blockchain without network consensus.

Answer

They are built on decentralized platforms resistant to censorship.

Answer

They are designed to execute autonomously without human intervention.

Question 19

Which of the following is a potential consequence of a bug in a smart contract?

Accepted Answer

Loss of funds due to unauthorized transactions or unintended actions.

Answer

Slower confirmation times for transactions on the blockchain.

Answer

Increased transaction fees on the blockchain network.

Question 20

What is the primary purpose of 'auditing' in smart contract development?

Accepted Answer

To identify and mitigate potential security risks and vulnerabilities in the code.

Answer

To ensure compliance with legal and regulatory frameworks.

Answer

To optimize smart contract execution performance and efficiency.

Question 21

Which of the following is a crucial factor in mitigating the risk of bugs in smart contracts?

Accepted Answer

Thorough code review and testing by experienced developers.

Answer

Implementing robust encryption and cryptography for secure communication.

Answer

Using a decentralized platform with a high degree of consensus.

Question 22

A smart contract designed for selling digital assets fails to account for multiple buyers bidding simultaneously. This scenario highlights which limitation of smart contracts?

Accepted Answer

Lack of concurrency control and coordination mechanisms.

Answer

Inability to handle complex state transitions and data updates.

Answer

Limited support for user interfaces and interactive experiences.

Question 23

A smart contract for a decentralized marketplace fails to consider potential user conflicts (disputes over payment or delivery). Which limitation does this scenario highlight?

Accepted Answer

Inability to resolve disputes or handle disagreements between parties.

Answer

Limited support for privacy and data confidentiality.

Answer

Difficulty in integrating with traditional payment systems.