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VOOZH | about |
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VOOZH | about |
Blockchain is the backbone technology of digital cryptocurrencies. Bitcoin. The blockchain is a distributed database that stores records of all transactions or digital events that have been completed and shared by participating parties. Each transaction is validated by the majority of the system's members. It holds every record of each transaction. Bitcoin, the most widely used cryptocurrency, is an example of blockchain technology.
Blockchain technology initially became known when a person or group of people known as 'Satoshi Nakamoto' published a white paper titled "BitCoin: A peer-to-peer electronic cash system" in 2008. Blockchain technology records transactions in a digital ledger that is distributed across the network, making it incorruptible. Anything of value, such as land, cars, and so on, can be recorded on Blockchain as a transaction.
Blockchain is a decentralized technology. It is a distributed database where data is stored in blocks. These blocks are connected with each other forming a chain where each block contains a timestamp and links to the previous block. Every node in the blockchain network gets a copy of the whole database and there is no central authority holding all the data.
Consensus is basically a set of protocols that regulate the blockchain network. It ensures no duplicate block is added to the chain and the block is added only after it is agreed upon by all other nodes in the network. It helps to achieve reliability and trust among the peer nodes.
There are different consensus algorithms:
Bitcoin | Ethereum |
|---|---|
| Bitcoin was introduced by Satoshi Nakamoto in 2008 | Ethereum was introduced in the year 2013 by Vitalik Buterin |
| Bitcoin is a cryptocurrency | Ethereum is also a cryptocurrency but it contains executable codes and smart contract that are used for making DApps |
| The average block time is 10 min | The average block time is 10-15 sec |
| Bitcoin is Turing incomplete | Ethereum is Turing complete |
| It uses Proof of Work (PoW) | Although, Ethereum used to work on PoW, it transitioned to Proof of Stake (PoS) in September 2022 |
| Its native cryptocurrency is Bitcoin (BTC) | Its native cryptocurrency is Ether (ETH) |
Proof of Work: PoW is a consensus algorithm in which a puzzle or problem is given. The node that solves the given puzzle first, gets the reward. And the block is added to the network after broadcast. It verifies the transaction. Any malicious user would need to have 51% of computation power to solve the problem and thereby add the wrong block.
Proof of Stake: Proof of Stake is a consensus algorithm in which the new block is validated by the node having the highest stake or highest coins. There is no reward system instead the validator collects the network fee. Any malicious user would need to have 51% of the total money on the network to add a wrong block.
Smart Contracts are self-executable lines of code in blockchain. They define the rules of how a transaction has to be processed between the parties under specific conditions. It is basically a digital contract for a blockchain network that facilitates implementing new functionalities using the blockchain allowing them to use in real world applications.
Blocks are added to the blockchain through the process of mining. When a transaction is made, the corresponding block is created which needs to be first validated by more than half (51% at least) of the nodes on the network. Once validated, the block is broadcasted to the whole network and then added to the blockchain.
Merkle trees data structure is also called a binary hash tree. It helps to verify whether a transaction can be added to a block or not. Every transaction is hashed through the proper algorithms. Each leaf node is a hash of the transaction and the non-leaf node is a hash of its previous hashes (child hashes). The hash generated at the end (or top of the tree) is called the Merkle Root.
This Merkle root is stored in the block header. Thus, a block header contains Merkle Root, Hash of the previous block, Timestamp, and Nonce. All of them help to make the block tamper-proof and maintain the integrity of the data.
This Merkle Tree structure is used by both Bitcoin and Ethereum.
Blockchain | Database |
|---|---|
| Blockchain is a decentralized network with no central authority. | The database is centralized because there is an admin who manages the whole database. |
| Blockchain is slow in terms of data processing | Database is fast |
| More secure and tamperproof | Less secure and prone to hacks |
| Blockchain provides history to trace back to any transaction | The database does not provide any tracing back feature |
The scenario where one digital token is spent multiple times because the token generally consists of a digital file that can easily be cloned is known as double-spending. It simply leads to inflation and organizations must bear a huge loss as the same coins could be spent twice by its owner. Blockchain prevents double-spending by confirming a transaction by multiple parties before the actual transaction is written to the ledger. This confirmation serves as the governing factor in terms of security as well.
It is the situation where malicious miners/attackers are present in the majority of a blockchain network i.e., more than 50%. They try to prevent new transactions from gaining confirmations and are also capable of reversing transactions that are completed; it means they could double-spend coins.
As we wrap up, you're now packed with valuable insights on blockchain interview questions and answers, ready to shine in your next blockchain industry interview. From basics to complexities, we've covered it all to ensure you're fully prepared. But remember, it's not just about memorizing – it's about understanding the core concepts. So, dive into your prep, practice enthusiastically, and step into that interview room with confidence.
