The table labeled "Annual Fedwire Transfers" depicted in Figure 22-A illustrates:

A. The processing capacity of both Bitcoin and FedWire is comparable.
B. On average, the processing capacity of the Bitcoin network far exceeds that of Fedwire by several orders of magnitude.
C. On average, Fedwire's processing capacity significantly outstrips that of the Bitcoin network by several orders of magnitude.
D. A comparison cannot be drawn from the provided data as each transaction on Fedwire represents a collection of multiple transactions.

Question

The table labeled "Annual Fedwire Transfers" depicted in Figure 22-A illustrates:

A. The processing capacity of both Bitcoin and FedWire is comparable.
B. On average, the processing capacity of the Bitcoin network far exceeds that of Fedwire by several orders of magnitude.
C. On average, Fedwire's processing capacity significantly outstrips that of the Bitcoin network by several orders of magnitude.
D. A comparison cannot be drawn from the provided data as each transaction on Fedwire represents a collection of multiple transactions.

BlackTom AI · Accepted Answer

Topic: Understanding what the table labeled 'Annual Fedwire Transfers' in Figure 22-A demonstrates.

Option A: 'The processing capacity of both Bitcoin and FedWire is comparable.' This would mean Bitcoin and FedWire handle similar volumes of value transfers per unit time. In most analyses comparing FedWire (a large-value, bank-owned network) with Bitcoin (a decentralized, permissionless system), FedWire typically shows a much higher aggregate throughput and strictly different architecture. Therefore this option is unlikely to be accurate given the usual contrasts in processing capacity between a real-time retail settlement system and a cryptocurrency network.

Option B: 'On average, the processing capacity of the Bitcoin network far exceeds that of Fedwire by several orders of magnitude.' This asserts Bitcoin handles vastly more transactions or value per time than FedWire. Common understanding and the data in such figures generally indicate the opposite: FedWire is designed for high-value, high-throughput bank settlements and tends to outpace Bitcoin in aggregate capacity. As a result, this claim mischaracterizes the relative scale and tends to be incorrect.

Option C: 'On average, Fedwire's processing capacity significantly outstrips that of the Bitcoin network by several orders of magnitude.' This reflects the typical interpretation of a comparison where a centralized, large-value settlement system like FedWire processes far more volume per time than Bitcoin, which has limited throughput due to blocksize/latency constraints. If the figure shows Fedwire transferring large aggregate sums or numbers of transfers far above Bitcoin, this statement would be supported.

Option D: 'A comparison cannot be drawn from the provided data as each transaction on Fedwire represents a collection of multiple transactions.' This claim suggests data in the figure cannot be used for a direct capacity comparison because Fedwire transactions are aggregates. While Fedwire transactions can represent large-value nets, standard analyses still provide a meaningful capacity comparison by aggregating or normalizing the data. Therefore, presenting an absolute barrier to comparison is not consistent with typical interpretation of such figures, making this option suspect.

In summary, each option presents a different interpretation of what the 'Annual Fedwire Transfers' table implies. The analysis above weighs how the data would typically be interpreted: A and B assume near-equal or reversed relative capacities, D questions comparability, and C aligns with the common understanding that Fedwire’s capacity substantially exceeds Bitcoin’s throughput. The reasoning for ruling out A, B, and D hinges on known contrasts in system design, throughput, and how aggregate data is interpreted in such comparative figures, whereas the reasoning for C aligns with Fedwire's role as a high-throughput, large-value settlement network compared to Bitcoin.

APS1050H F LEC0101 Broken Money Quiz

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