Monday, 23 December 2019

Top 20 BlockChain interview Questions


Ques: 1. What are the differences between a traditional database and Blockchain database?

Ans: The difference between a traditional database and blockchain database is as follows:

1. Storage of Records: In a traditional system the records are centralized whereas in Blockchain the records are decentralized.

2. Operations Done: In a Blockchain system, you can only perform insert operations whereas in the traditional system you can read, edit, create and update the transactions.

3. Validations of transactions: You can validate any number of transactions on the network in a Blockchain whereas in the traditional database only specific nodes are allowed to validate the transactions.


Ques: 2. What are Ethereum Smart Contracts and in which language is Ethereum written?

Ans: A Smart Contract is a set of program that gets automatically executed on meeting the certain requirements of Blockchain. Ethereum is generally written in Solidity programming language.


Ques: 3. What are the types of record that can be kept in Blockchain?

Ans: In Blockchain, you can keep any number of records. Few of the records that can be kept in the blockchain ledger are:

1. Medical Transactions and history

2. The identity of numerous persons

3. Several numbers of events that take place in an organization and organizational records

4. Management records of companies that can be accessed from anywhere in the world with proper secure transactions

5. Documents that are to be kept at high-level security


Ques: 4. What are the benefits of Blockchain in business?

Ans: European Banks have already launched their projects to use this technology. The international payments system VISA has also joined them. Blockchain gives several advantages to the financial sector some of which are listed below:
  • Money Transfer will become faster and cheaper payments are possible and significantly reduce their costs. 
  • With the help of the Smart Contracts are computer programs which facilitate to verify and negotiation of the agreement. 
  • In stock exchange Blockchain can remove brokers as intermediaries and decentralize the stock exchange system.

Ques: 5. What are the basic components of the Blockchain Ecosystem?

Ans: There are four basic components of Blockchain ecosystem as explained here:
  • Shared Ledger:  It is a distributed data structure shared among peers managed inside Node application. 
  • Node Application: Each of the nodes is installed and run on a computer to become a part of the blockchain network. 
  • Virtual Machine: Here the implementation of instruction takes place and every participant runs that VM. 
  • Consensus Algorithm: It is implemented as a part of node application which provides the rules for validation of transactions.

Ques: 6. How many cryptographic algorithms are used in Blockchain?

Ans: Here are some of the widely used cryptographic algorithms:
  • Triple DES: DES stands for digital encryption system which uses 3 different keys of 56 bits. 
  • RSA: It is used in several areas in the digital certificate which is a public key encryption algorithm to encrypt the information transferred on the internet. 
  • Blowfish: It is highly effective and works with great speed which encrypts the cipher messages individually. 
  • Twofish: It is similar to blowfish with keys of length 256 bits. 
  • AES: Of all algorithms, AES is the strongest encryption algorithm to breach out as it uses 192 and 256 length bit keys for heavy encryption.

Ques: 7. Can you explain pragma and provide its syntax?

Ans: Pragma is a version of Solidity that will be used by the code that is written in the solidity. For using solidity as a compiler and writing smart contracts the version should be higher than 0.4.0. Every Smart contract starts with pragma only.

Syntax: version pragma ^0.4.00.


Ques: 8. What do you mean by Merkle trees and explain its importance in Blockchain?

Ans: Also called as the hash tree, Merkle tree is the fundamental part of a Blockchain. merkle tree uses cryptographic blocks which are used to securely transact large chunks of data. Both Ethereum and Bitcoin use Merkle trees.


Ques: 9. What do you understand by 51% attack?

Ans: The blockchain is a chain of blocks that stores all transactional data in a period. Once the block enters the system it cannot be altered, and the fraudulent data would be automatically rejected by network users. However, if 51% of the miners are controlled then a group of attackers can interfere with the process of recording of new blocks. 
They can block other users transactions and reverse it also. It is also known as double spending. A network that would allow double spending could suffer a loss of confidence. Then this kind of attack is called a 51% attack.


Ques: 10. What is a block in blockchain technology?

Ans: Blocks are the storage unit of the blockchain. They are fundamental to the network, and the transactions data is stored within them. They be books with each page equivalent to a transaction. Blocks are immutable. This means if a data is recorded, it cannot be changed or deleted. Also, blocks are organized linearly in a blockchain.
A block is mined by a miner which acts to verify the transaction. This means that until a transaction is not mined, it will not be shown on the blockchain and the transaction will be deemed incomplete.


Ques: 11. What is the role of encryption in blockchain?

Ans: Encryption is an age-old technique to protect data from third parties or leak. It is the basics of data security in the modern world. Blockchain also utilizes encryption to good effect. The data before it is sent off to the receiver is encrypted. The received will only be able to unlock it as it is only meant for him. Once the receiver receives it, it is unencrypted and can be used as liked.
Blockchain also uses encryption in other ways. Also, modern blockchain solution tends to improve encryption and provide complete privacy-based experience for users.


Ques: 12. What is the difference between the standard ledger and a blockchain ledger?

Ans: The biggest difference between these two types of ledger is the decentralization that they have to offer. Blockchain ledger is decentralized which means that it offers unique capabilities such as trust, immutability, transparency, and security. Standard ledger does carry these features but is limited to certain extent.
As humans create, modify and monitor the standard ledger, there is always a chance of an error creeping in or worse a security breach. Blockchain ledger solves all the problems that standard ledger has by providing a decentralized version.


Ques: 13. What is Node Application? Explain in detail.

Ans: Node application is a computer application that a computer needs to be part of the ecosystem. Without the node application, it is not possible for a device to participate in blockchain activity.
There is different node application when it comes to the blockchain. Bitcoin, for example, uses the Bitcoin wallet application to make a computer compatible with the blockchain.
Technically, there is a service overlay network(SON) that interfaces between the blockchain and the computer. The computer needs to use the node application to read and reply in a specific manner,
Not all node application is free from restriction. Some blockchains are stick when allowing a node to join the application. It needs permission to do so.


Ques: 14. What are the different types of Consensus Algorithm? Explain each of them briefly.

Ans: There are three main types of consensus algorithm.
  1. Proof-of-Work(PoW): Proof-of-Work(PoW) is used by the most popular cryptocurrencies out there. Bitcoin, Ethereum, and Litecoin use it. It works by solving complex mathematical problems. The hash needs to be solved for the block to be mined. Once it is done, the transaction is validated, and the consensus is made.
  2. Proof-of-Stake(PoS): Proof-of-Stake(PoS) works by staking coins. The nodes need to stake a minimum amount of coins to become part of the consensus network. Once they become part, they actively take part in making decisions on the network. Unlike Proof-of-Work, PoS doesn’t require huge computational power, and hence power. 
  3. Delegated Proof-of-Stake(DPoS): Delegated Proof-of-Stake is a centralized approach to a blockchain network. In this consensus method, the stakes choose delegates which in turn validate the transactions.

Ques: 15. What is ‘blind signature’ and why is it used?

Ans: Blind Signature is a digital signature wherein all the information pertaining to a contract is made blind before it is actually agreed upon and sealed with a sign. This approach is a crucial component of cryptography and is mainly used for privacy-related protocols (for example, digital cash scheme) where the author and the signing parties are different.


Ques: 16. What are the fundamental principles in Blockchain that are used to eliminate security threats?
Ans: The fundamental principles in Blockchain that must be followed to eliminate security threats are:
  1. Auditing 
  2. Securing applications 
  3. Securing testing and similar approaches 
  4. Database security 
  5. Continuity planning 
  6. Digital workforce training

Ques: 17. What do you understand by the terms – ‘public key’ and ‘private key.’?

Ans: A public key is one which is used in cryptographic algorithms that allow all the users/peers in a Blockchain network to receive funds in their wallet. This key is essentially an alphanumeric string that is unique to a particular node or address.
A private key, on the other hand, is an alphanumeric phrase that is used in pair with a public key for encryption and decryption purposes. This key remains with a single individual who is the key generator for it. In case, anyone else gets their hand on the private key, the data within the wallet of the generator will be compromised.


Ques: 18. What do you mean by ‘off-chain’ transactions?

Ans: An off-chain transaction occurs when values are moved or placed outside the Blockchain. In this sense, it is merely a ‘transaction’ and not a ‘Blockchain transaction.’ Such transactions have no bearings on the values stored within the blocks of a Blockchain. 


Ques: 19. Explain ‘secret sharing.’

Ans: Secret Sharing is a method dedicated to protecting data integrity in Blockchain. In this method, the information or data is divided into different units and then transferred to the users on the Blockchain network. To complete the entire information, users who received the chunks of broken information must agree to share their pieces of information and combine them together.


Ques: 20. Explain a real-time blockchain use case?

Ans: Healthcare can use blockchain to their advantage. Many startups are currently working on a blockchain powered health app that lets patients store their information on the blockchain. The decentralized nature means that they don’t have to carry documents. Healthcare specialist can also take advantage of it as they can access the patient’s data anytime they want. Researchers also benefit from public blockchain where they can access large public data.


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