Introduction
The rapid evolution of blockchain technology in the past few years has made joining blockchain technology companies a top choice for developers. However, given the complexity and rapid evolution of the technology, preparing for a blockchain interview can be a daunting task.
This blog is a comprehensive guide to the most common and important blockchain interview questions. Let’s get started!
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60 Blockchain Interview Questions and Answers
1. What is Blockchain, in simple words?
In simple words, Blockchain can be described as a distributed database that stores data in blocks. It is a digital record-keeping system or ledger used to record transactions across multiple computers. As a decentralized technology, Blockchain ensures secure, transparent, and immutable data. With blockchain, there is no need for intermediaries as only participants are allowed to verify and audit transactions independently.
2. What are the different types of Blockchain?
There are four main types of blockchain:
- Public Blockchain: This is open to everyone and fully decentralized (e.g., Bitcoin, Ethereum).
- Private Blockchain: A single organization controls a private blockchain. It is accessible to selective participants.
- Consortium Blockchain: It is partially decentralized and is controlled by a group of organizations.
- Hybrid Blockchain: It uses the benefits of both public and private blockchains.
3. What are the features of Blockchain?
The top features of Blockchain are:
- Immutability: Once recorded, data cannot be altered. Transactions added to the ledger are stored there permanently.
- Decentralization: There is no central governing authority that manages blockchain. The data is distributed across a network.
- Transparency: All participants have access to the same data in Blockchain.
- Security: A data block is added to a chain only after thorough validation. Strong cryptographic techniques ensure data integrity and security.
- Open ledger: Every transaction that is done is an open record that is visible to all. This enforces trust among all participants.
- Consensus Mechanisms: Blockchain works on certain protocols that have consensus algorithms. Methods such as Proof of Work (PoW) and Proof of Stake (PoS) validate transactions.
4. How is Blockchain different from a database?
| Blockchain | Database |
|---|---|
| It is a decentralized network without a central governing authority. | It is centralized as an admin manages the entire database. |
| It is slow in processing data. | It processes data faster. |
| It is more secure and tamper-proof. | It is comparatively less secure and prone to hacks. |
| Blockchain provides a complete history, allowing users to trace back any transaction. | Databases do not offer any way to trace back transactions. |
5. What are the principles of Blockchain technology?
- Decentralization: Power is distributed among all users in the network, preventing any single user from hacking, manipulating, or shutting down the chain of blocks. This decentralized nature makes blockchain hack-resistant.
- Integrity: All users have the right to make decisions, fostering trust in the system based on user consensus rather than enforced authority.
- Cryptography: Blockchain employs cryptographic techniques to ensure security and data integrity, allowing information to be transmitted without being duplicated.
- Security: Utilizing Public Key Encryption, blockchain ensures that transactions are highly secure. However, if the public key is shared, it compromises the security, and no solution exists to protect it in such cases.
6. What are the top use cases of blockchain technology?
Here are the top use cases of blockchain technology:
- Cryptocurrency: Blockchain makes cryptocurrencies like Bitcoin and Ethereum secure and transparent peer-to-peer transactions possible without the need for intermediaries.
- Supply Chain Management: Blockchain technology in supply chain enhances transparency and traceability in supply chains. All parties can track the movement of goods, verify authenticity, and reduce fraud.
- Healthcare: Blockchain keeps patient records safe, ensuring data integrity and privacy. It also facilitates efficient data sharing among healthcare providers, improving patient care.
- Finance: Blockchain streamlines financial transactions, reducing costs and increasing security. It is used for cross-border payments, smart contracts, and decentralized finance (DeFi) applications.
- Media: Blockchain helps in managing digital rights and royalties, ensuring that creators are fairly compensated for their work. It also combats piracy by providing a transparent record of content ownership.
- Real estate: Blockchain simplifies property transactions because of a transparent and immutable record of ownership. It reduces fraud and speeds up the process of buying and selling properties.
- Cybersecurity: Blockchain improves security by providing a decentralized and tamper-proof system for storing and transmitting data. It is used to secure identities, protect sensitive information, and prevent cyber attacks.
- Digital Voting: Blockchain ensures secure and transparent voting processes. It prevents tampering and fraud, providing a verifiable and immutable record of votes.
7. Is Blockchain a trusted approach?
Blockchain is a trusted approach because:
- As an open-source technology, blockchain is compatible with many business applications.
- It uses public key encryption that provides secure transactions.
- It promotes equal opportunities for all without any discrimination in the global economy.
8. What are the components of a blockchain architecture?
- Nodes: These are individual devices within the blockchain network that maintain copies of the blockchain and validate transactions. In other words, it refers to a user/computer within the blockchain architecture.
- Hashing: It is a process of transforming input data into a fixed-size string of characters, known as a hash. Hashes link blocks together, creating a chain.
- Transaction: It is a collection of transactions that is shared across all nodes in the network.
- Block: It is used to maintain transactions distributed to all the nodes in the network.
- Chain: This refers to a series of connected blocks.
- Miners: These are specialized nodes that validate blocks before they are added to the blockchain.
- Consensus Protocol: These refer to a set of rules that govern blockchain operations.
9. How do you identify a Block?
Each block in a blockchain can be identified by the following four components:
- Hash Value: This is the hash of the previous block, which acts as a link to the preceding block.
- Transactional Data: This includes all the details of the transactions contained within the block.
- Nonce: A random number used to vary the hash value to meet specific criteria.
- Block Hash: This is the unique digital signature of the block, represented as an alphanumeric string, which uniquely identifies the block.
These elements ensure the integrity and security of the blockchain, making each block distinct and verifiable.
10. What are the elements of a block in a blockchain?
A block in a blockchain contains the following elements:
- A hash pointer to the previous block
- A list of transactions
- Timestamp
Also Read: Blockchain in Cloud Computing 11. How to add blocks to a Blockchain?
Blocks are added to a blockchain through mining. When a transaction occurs, a corresponding block is generated. This block must be validated by at least 51% of the nodes in the network. After validation, the block is broadcast to the entire network and subsequently added to the blockchain.
12. How is a hash value generated in a blockchain?
The following steps are carried out to generate a hash value block signature:
- Transaction details are processed through the SHA-256 one-way hash function.
- The resulting hash is then passed through a signature algorithm, such as ECDSA, using the user’s private key.
- The encrypted hash, along with additional information, forms the digital signature.
13. What are the steps of Blockchain project implementation?
- Requirement Identification
- Planning
- Development of project
- Feasibility study on the security of the project
- Implementation
- Controlling and Monitoring the project
14. What is the difference between Blockchain and Hyperledger?
| Aspect | Blockchain | Hyperledger |
|---|---|---|
| Type | Public or private distributed ledger | Private and permissioned distributed ledger |
| Purpose | General purpose, supports various applications including cryptocurrencies | Designed for enterprise use, focusing on business applications |
| Governance | Decentralized, often governed by a community or foundation | Governed by the Linux Foundation and its members |
| Consensus Mechanism | Various mechanisms like Proof of Work (PoW) and Proof of Stake (PoS) | Pluggable consensus mechanisms, often Byzantine Fault Tolerant (BFT) |
| Confidentiality | Transactions are generally transparent and visible to all participants | Transactions are private and only visible to authorized participants |
| Smart Contracts | Supports smart contracts (e.g., Ethereum) | Supports smart contracts through chain code (e.g., Hyperledger Fabric) |
| Flexibility | Less flexible in terms of customization for specific business needs | Highly flexible and modular, allowing customization for specific business needs |
| Performance | Can be slower due to the need for consensus across a large number of nodes | Generally faster due to fewer nodes and permissioned access |
15. What are the two types of records in the blockchain databases?
Block Records: These contain the details of the blocks themselves, including metadata such as the block header, the hash of the previous block, and the Merkle root.
Transactional Records: These include the actual transaction data that is stored within each block, detailing the exchanges of assets or information between parties
16. What type of records can be kept in the blockchain?
Blockchain technology is incredibly versatile and can be used to store a wide variety of records. Here are some common types:
- Financial Transactions: Cryptocurrencies like Bitcoin and Ethereum use blockchain to record transactions securely and transparently.
- Supply Chain Data: Companies use blockchain to track the movement of goods from origin to destination, ensuring transparency and reducing fraud.
- Healthcare Records: Patient records can be securely stored and shared among authorized healthcare providers, improving patient care and privacy.
- Identity Verification: Blockchain can be used for digital identities, ensuring secure and tamper-proof identity verification.
- Voting Records: Blockchain can provide a secure and transparent way to conduct elections, reducing the risk of fraud.
- Property Records: Land titles and property deeds can be recorded on the blockchain, making them more secure and easier to transfer.
- Intellectual Property: Copyrights, patents, and trademarks can be recorded on the blockchain to protect intellectual property rights.
- Smart Contracts: These are self-executing contracts with the terms directly written into code, which can be used for various automated agreements.
17. What is the Genesis block?
The Genesis block is the first block in a blockchain. It is also known as Block 0 or Block 1, and is the foundation of all subsequent blocks.
18. Name some cryptographic algorithms used in blockchain.
Here are some extensively used cryptographic algorithms
- SHA-256: Widely used in Bitcoin for hashing transactions and blocks.
- Ethash: Proof-of-Work hashing algorithm used in Ethereum for mining
- Triple DES: Symmetric-key block cipher used for encrypting data.
- RSA: Asymmetric encryption algorithm used for secure data transmission and digital signatures.
- Blowfish: Symmetric-key block cipher used in general-purpose encryption.
19. Can one modify the data written in the block?
Once data is written to a block in a blockchain, it cannot be modified into one particular block. This is because cryptographic hashing, consensus mechanisms, and decentralization ensure that once data is recorded on the blockchain, it remains secure and tamper-proof.
20. How to check if a block is a valid block?
When a new block is announced on the network, each node that receives it performs a series of checks. The two most crucial checks are:
- Proof of work: Ensuring the block has completed sufficient computational work to be added to the chain.
- Validity of all the transactions: Confirming that every transaction within the block is legitimate and follows the network’s rules.
Also Read: What are the top 10 in-demand jobs in India? 21. What method is used to recognize a block in the blockchain approach?
In the Blockchain approach, every block has a hash pointer. It links to the previous block, transaction data, and time stamp.
22. What is the difference between public and private keys?
| Aspect | Public keys | Private keys |
|---|---|---|
| Aspect | Used to encrypt data and verify digital signatures | Used to decrypt data and create digital signatures |
| Purpose | Shared openly and can be distributed widely | Kept secret and known only to the owner |
| Generation | Derived from the private key using cryptographic algorithms | Generated first and used to derive the public key |
| Usage in Blockchain | Commonly used to receive funds and verify transactions | Used to sign transactions and access funds |
| Security | Security depends on the secrecy of the private key | Must be kept secure to ensure the integrity of the system |
| Example | Public address in a cryptocurrency wallet | Private key in a cryptocurrency wallet |
23. Can we remove a complete block from a blockchain network?
A few default options and filters can be used to remove a complete block from the network. However, these options are helpful only when a specific portion of the online ledger is to be considered.
24. What are smart contracts and how are they useful?
Smart contracts are self-executing code on a blockchain that outline the rules for how a transaction should be conducted between parties based on predefined conditions. Essentially, they act as digital agreements within a blockchain network, enabling the implementation of new functionalities. This allows blockchain technology to be applied in practical, real-world scenarios.
25. What are some applications of smart contracts?
Some applications of smart contracts are:
- Insurance: Smart contracts can automate the processing of insurance claims.
- Employee contracts: Smart contracts can automate employment agreements, ensuring timely salary payments, bonuses, and adherence to job terms.
- Transportation: Smart contracts can manage transactions in decentralized ride-sharing platforms or between autonomous vehicles and users.
- Intellectual Property Protection: Smart contracts can enforce digital rights, ensuring creators get paid when their work is used, distributed, or licensed.
- Crowdfunding and Initial Coin Offerings (ICOs): Smart contracts are used in ICOs and crowdfunding platforms to collect funds and distribute tokens to investors once a funding goal is met.
- Healthcare: Smart contracts can provide secure and tamper-proof methods for sharing patient medical records between healthcare providers, ensuring data privacy and reducing administrative overhead.
- Real Estate: Smart contracts can handle property sales, automatically transferring ownership once payment is received. This reduces the need for intermediaries like real estate agents or lawyers.
26. Where do nodes run a smart contract?
Smart contracts are executed on blockchain nodes that operate in a virtual machine environment, such as the Ethereum Virtual Machine (EVM). All nodes on the network execute the contract in a decentralized manner, ensuring that the outcome is consistent and agreed upon by all nodes. The contract code and state are stored on the blockchain, with every node holding a copy of the entire network’s history.
27. What is the Consensus mechanism in Blockchain?
Consensus refers to a collection of protocols that govern the functioning of a blockchain network. Its primary role is to prevent duplicate blocks from being added to the chain, ensuring that a block is only appended once it has been validated and agreed upon by all nodes in the network. This process fosters trust and reliability among the participating nodes.
Various consensus algorithms exist, including:
- Proof of Work (PoW)
- Proof of Stake (PoS)
- Proof of Elapsed Time
- Proof of Capacity
- Proof of Burn
28. What is the difference between Bitcoin and Ethereum?
| Feature | Bitcoin | Ethereum |
|---|---|---|
| Primary purpose | Digital currency (store of value, payments) | Smart contract platform and dApps (in addition to cryptocurrency) |
| Consensus Mechanism | Proof of Work (PoW), transitioning to Proof of Stake (via sidechains like Stacks) | Proof of Stake (PoS), formerly used Proof of Work (PoW) |
| Blockchain Focus | Secure, decentralized transactions of currency (BTC) | Smart contracts, decentralized applications (dApps), and programmable blockchain |
| Native Cryptocurrency | Bitcoin (BTC) | Ether (ETH) |
| Smart Contract Support | No | Yes (Ethereum Virtual Machine – EVM) |
| Developer Flexibility | Minimal, focused on monetary transactions | High flexibility, allows for building decentralized apps (dApps) |
| Hashing Algorithm | SHA-256 | Ethash (PoW) and now Proof of Stake (PoS) |
| Governance Model | Decentralized, limited upgrade flexibility | More adaptable, with frequent upgrades (e.g., Ethereum 2.0) |
29. What are a few types of Ethereum Networks?
Ethereum consists of three types of networks:
- Main Network: This is the primary Ethereum network where smart contracts are deployed and actual transactions take place.
- Test Networks: Examples include Rinkeby, Kovan, and Ropsten. These networks allow users to test and run smart contracts without incurring any fees before deploying them on the main network.
- Private Networks: These are independent networks that operate within an organization’s environment, maintaining the features of the Ethereum network but without any connection to the main network.
30. What is the difference between Proof-of-Work and Proof-of-Stake?
Proof of Work (PoW): In this consensus algorithm, nodes compete to solve a complex puzzle. The first node to solve it earns a reward, and the block is broadcast and added to the blockchain, verifying the transaction. For a malicious actor to manipulate the network, they would need to control 51% of the computational power to successfully add an incorrect block.
Proof of Stake (PoS): In PoS, new blocks are validated by the node holding the largest stake or the most coins. Instead of earning rewards, the validator collects transaction fees. To manipulate the system, a malicious participant would need to control 51% of the total value on the network to insert a fraudulent block.
31. What is a Merkle Tree?
The Merkle tree, also known as a binary hash tree, is a data structure used to verify whether a transaction can be included in a block. Each transaction is hashed using the appropriate algorithms. The leaf nodes represent the hash of each transaction, while non-leaf nodes contain the hash of their child hashes. The Merkle Root is the final hash at the top of the tree. This Merkle Root is stored within the block header, which also contains the hash of the previous block, a timestamp, and a nonce. Together, these elements ensure the block’s tamper resistance and maintain data integrity. Both Bitcoin and Ethereum utilize the Merkle Tree structure in their blockchains.
32. What is Double Spending?
Double spending in blockchain refers to the risk or act of spending the same cryptocurrency or digital asset more than once. In a decentralized blockchain, this can happen if someone attempts to manipulate the system by creating two conflicting transactions—using the same funds in two places—before the network can verify and confirm them. This can lead to inflation and significant financial losses for organizations, as the same coins might be spent multiple times by their owner. Blockchain technology mitigates double spending by requiring multiple confirmations from network participants before a transaction is recorded on the ledger. This multi-party validation is crucial for maintaining security and ensuring the integrity of the transaction record.
33. What is a 51% attack?
It is a situation that occurs when malicious miners or attackers control more than 50% of a blockchain network. In such a scenario, they can obstruct the confirmation of new transactions and even reverse completed transactions, potentially allowing them to double-spend coins.
34. What is the first thing specified in the Solidity file?
The first line indicates the version of Solidity being used, which helps avoid compatibility issues that may arise when comparing different versions. It’s crucial to specify the correct version number to ensure the code functions properly.
35. What do you mean by Nonce? How is it used in Mining?
Nonce stands for “number used once.” It is a random or arbitrary value that is used only a single time in a cryptographic communication or calculation. In cryptocurrency mining networks like Bitcoin, the nonce is used to solve a cryptographic puzzle, which is part of the Proof of Work (PoW) consensus mechanism.
36. Are there any network-specific conditions for using Blockchain technology in an organization?
Although there is no specific network condition, the network must be a peer-to-peer network under the concerned protocols. Organizations must address the network-specific conditions and considerations when implementing blockchain technology. These conditions can vary depending on the type of blockchain network (public, private, or consortium) and the specific requirements of the organization.
37. What is the difference between Blockchain and Baking Ledgers?
One of the most notable distinctions between blockchain and traditional banking ledgers is that blockchain technology is decentralized, distributed, and open-source. This eliminates the need to depend on a central bank for transaction tracking. In a blockchain’s peer-to-peer network, transactions are recorded and maintained without the risk of loss or deletion.
Additionally, blockchain’s open-source nature offers greater versatility and ease of programming. Developers can seamlessly integrate new functionalities into existing systems through consensus mechanisms.
38. Does blockchain support executive accounting?
Executive accounting primarily deals with corporate rather than public accounting, meaning it manages the financial affairs of a business rather than focusing on individual accounts. Blockchain technology includes specific algorithms tailored to handle corporate accounting tasks effectively.
39. What do you mean by secret sharing? Does it have any benefit in Blockchain technology?
Secret sharing is a cryptographic technique used to divide a piece of sensitive information (the “secret”) into multiple parts, known as “shares,” which are distributed among participants. Reconstruction of the secret can be done only after a sufficient number of shares are combined together. This technique is particularly useful for enhancing security and ensuring that no single party has complete access to the secret.
40. What is an off-chain transaction?
Off-chain transactions occur outside the cryptocurrency network. The value is transferred without recording them directly on the blockchain. These transactions are gaining popularity due to their low or zero cost. Key features include:
On-Chain Recording: Off-chain transactions might eventually need to be recorded on the blockchain.
Advantages: They often involve lower fees, faster settlement, and enhanced anonymity compared to on-chain transactions.
Mechanism: Rather than transferring funds directly, off-chain transactions may involve exchanging private keys associated with existing wallets.
Also Read: Building a Personal Brand for Career Success 41. What are the parts of an EVM memory?
The Ethereum Virtual Machine (EVM) memory consists of three main components:
- Storage: This is a costly and permanent storage area where values are saved on the blockchain. It ensures that data is retained indefinitely.
- Memory: This is a temporary and modifiable storage used during contract execution. Data in memory is lost once the contract execution ends.
- Stack: This is a temporary, non-modifiable storage used for operations during contract execution. The content in the stack is discarded after execution is completed.
42. What happens if the cost of execution of the smart contract is more than the specified gas?
Initially, the transaction will begin execution. However, if the cost to execute the smart contract is more than the specified gas, miners will stop the validation of the contract. The blockchain will record the transaction as failed and the user will not receive a refund.
43. What are function modifiers in Solidity? Name the most widely used modifiers.
Function modifiers in Solidity help change the behavior of functions within a smart contract. The most commonly used function modifiers include:
- View: These functions are read-only and cannot change the state of the smart contract.
- Pure: These functions neither read from nor write to the smart contract’s state.
44. What is forking, and what are the different types of forking?
Forking refers to changes in a cryptocurrency protocol or code, occurring when network participants disagree on the consensus algorithm or new rules for transaction validation. This results in the blockchain splitting into two branches. The different types of forking are:
- Soft Fork: An update to the blockchain protocol that is backwards-compatible, meaning older versions of the software can still recognize and validate new blocks.
- Hard Fork: A change to the blockchain protocol that is not backwards-compatible, requiring all participants to upgrade to the new version to continue interacting with the blockchain.
- Temporary Fork: This occurs when two miners create a new block simultaneously, leading to a brief divergence in the blockchain before the network resolves the conflict.
45. What factors influence gas usage in a transaction? How is the transaction fee calculated?
Gas usage in a transaction refers to the amount of computational effort required to execute operations on the Ethereum network, such as running smart contracts or processing transactions.
The total transaction cost is calculated as:
Total Cost = Gas Used x Gas PriceTotal Cost = Gas Used x Gas Price
This cost is deducted from the sender’s account in Ether.
46. In what order are the blocks linked in the blockchain?
In a blockchain, each block is connected to the previous one by containing a reference (or pointer) to the preceding block. This creates a chain of blocks linked in reverse chronological order.
47. Which cryptographic algorithm is used in blockchain?
Blockchain relies on the SHA-256 cryptographic algorithm, which was developed by the National Security Agency (NSA) in 2001. This hashing algorithm ensures data security and integrity.
48. What is the difference between a DApp and a Normal App?
| Aspect | DApp | Normal App |
|---|---|---|
| Architecture | Runs on a decentralized network, typically a blockchain (like Ethereum). It operates on a peer-to-peer network, where control and data are distributed across multiple nodes. | Operates on a centralized server or system controlled by a single entity, where all data and control are in one place (e.g., hosted on servers owned by a company). |
| Control and Ownership | No single entity has control; it is governed by a community or a protocol. Users have greater control over their data and interactions. | Controlled by a central authority or organization. Users rely on this entity for access, updates, and data management. |
| Includes | It includes:
| It includes:
|
| Transparency | Open-source, meaning anyone can view the code, which ensures transparency and trust. Changes to the application often require consensus from the community. | Proprietary code, controlled by a company or developer, making it less transparent. Users rely on the app provider for updates and fixes. |
| Data Security | Data is stored on a blockchain, which provides security, immutability, and resistance to censorship or tampering. | Data is stored on central servers, making it vulnerable to data breaches, manipulation, or single points of failure. |
49. Can a blockchain network be hacked?
Although Blockchain is a fairly secure network, it is not completely safe. Hacks that can be carried out by hackers in a blockchain network include:
- Direct denial of service
- Sybil attack
- Routing attack
- 51% attack
50. How is blockchain used for Digital Protection?
Blockchain provides a secure framework for protecting sensitive data, making it valuable for cybersecurity and digital protection. Its features, such as transparency, integrity, decentralization, and cryptographic protection, ensure that data remains safe and tamper-resistant in a blockchain environment.
Also Read: The Role of Social Media in Job Hunting 51. What is MetaMask?
MetaMask is an Ethereum wallet that acts as a bridge between Ethereum user interfaces (such as Mist browsers and DApps) and traditional web browsers (like Google Chrome, Mozilla Firefox, etc.). It injects a JavaScript library called web3.js into the browser’s environment, allowing users to interact with Ethereum-based applications. MetaMask is commonly used as a browser plugin for platforms like Google Chrome and Mozilla Firefox.
52. What is a lightning network?
The Lightning Network is a layer 2 payment protocol that operates off-chain. It makes transactions based on blockchain-based cryptocurrencies faster and more efficient. Lightning Network is in active development but is already being used by vendors for seamless payment processing.
53. What is Atomic Swap?
An Atomic Swap is an innovative smart contract technology that enables the exchange of one cryptocurrency for another without the need for a third-party exchange. This process occurs directly between two different blockchains or off-chain.
54. How are blocks and transactions encrypted in a Bitcoin implementation?
In Bitcoin, blocks are not encrypted since they are public. Instead, block contents are hashed using the SHA-256 hash function to ensure data integrity and prevent tampering. The hash of each block is included in the blockchain as a reference for verification.
55. Why does a blockchain need a token to be operational?
Tokens or coins are used to facilitate state changes within a blockchain. Whenever a transaction occurs, tokens are moved from one address to another, reflecting a change in state. While a blockchain can technically operate without tokens, there would need to be an alternative system in place to manage state transitions and validate transactions.
56. What are trapdoor functions in a blockchain?
Trapdoor functions are critical for public-key cryptography, which is essential for blockchain security. These functions are easy to compute in one direction and can be reversed only when specific information (such as a private key) is available. In blockchain, trapdoor functions are used to handle key concepts like addresses and private keys, securing the network and enabling encryption-based transactions.
57. What is a block identifier?
Each block in a blockchain network has a unique hash value that serves as its identifier. This ensures that no two blocks can have the same hash value, making each block uniquely identifiable.
58. How can you stop double-spending?
Double-spending is prevented through the use of consensus algorithms. These algorithms verify that the requested transaction is legitimate and then record it in a block, ensuring that multiple nodes validate the transaction, thereby preventing double-spending.
59. What do you mean by fungible and non-fungible tokens?
Fungible tokens refer to assets that can be easily exchanged with another asset of the same value. The most common examples of fungible assets are currencies like money, where one unit is interchangeable with another of equal value.
Non-fungible tokens (NFTs) are distinct from cryptocurrencies because they do not have an inherent, standardized value. Instead, their value is derived from the unique assets or goods they represent, making them one-of-a-kind and non-interchangeable.
60. What are the limitations of the blockchain?
- Scalability: Blockchains often face scalability issues due to their decentralized nature, which can lead to slower transaction speeds as the network grows.
- Energy Consumption: Proof-of-work blockchains (like Bitcoin) require significant computational power, leading to high energy usage.
- Regulatory Challenges: Blockchain technology operates across borders, which can lead to difficulties in complying with different national regulations.
- Data Immutability: Once data is recorded, it cannot be changed, making error corrections or deletions impossible.
- Storage: As the blockchain grows, the size of the ledger can become large, making it difficult for nodes to store and process all the data.
Conclusion
Blockchain technology is prominently used for secure information exchange and digital currency among other things today. Whether you are a seasoned developer or a newcomer, knowledge of blockchain basics will always put you in the top spot as a desired recruit. This blog can help you revise blockchain basics. Additionally, it can also help you get a fair idea of what to expect and how to showcase your knowledge and skills effectively. So, skill-up and sign up with Olibr now to find the best job that matches your skillset.
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