Blockchain Technology Core Concepts 3 — Questions and Answers
Question 1: What is the role of a cryptographic hash function's 'avalanche effect' in blockchain security?
- It speeds up block validation by batching hashes
- A small change in input produces a drastically different output hash, preventing predictability (Correct answer)
- It compresses transaction data to reduce block size
- It generates multiple hashes per block for redundancy
Correct answer: A small change in input produces a drastically different output hash, preventing predictability
The avalanche effect ensures that even a single-bit change in input results in a completely different hash, making tampering immediately detectable.
Question 2: In the context of blockchain, what does 'finality' mean?
- The maximum number of transactions per block
- The point at which a confirmed transaction cannot be reversed (Correct answer)
- The time required to generate a new block
- The process of retiring old blockchain addresses
Correct answer: The point at which a confirmed transaction cannot be reversed
Finality refers to the guarantee that a committed transaction is irreversible and permanently settled on the blockchain.
Question 3: What is a 51% attack and what does it allow an attacker to do?
- Stealing private keys from 51% of wallets
- Controlling the majority of network hash power to double-spend transactions (Correct answer)
- Encrypting 51% of nodes to demand ransom
- Forcing a protocol upgrade on 51% of nodes
Correct answer: Controlling the majority of network hash power to double-spend transactions
An attacker with >50% of the network's hash rate can reorganize the chain and potentially reverse recent transactions to double-spend.
Question 4: What is the purpose of transaction fees in a blockchain network?
- To fund the blockchain foundation's development
- To incentivize miners/validators to include transactions in blocks and prevent spam (Correct answer)
- To pay for the electricity used in verification
- To replace the block reward after all coins are mined
Correct answer: To incentivize miners/validators to include transactions in blocks and prevent spam
Transaction fees reward miners or validators for processing transactions and also deter spam by making mass frivolous transactions costly.
Question 5: How do SPV (Simplified Payment Verification) clients verify transactions without downloading the full blockchain?
- By trusting a central server's transaction records
- By downloading only block headers and using Merkle proofs to verify inclusion (Correct answer)
- By requesting full blocks only when sending transactions
- By storing only the UTXO set without transaction history
Correct answer: By downloading only block headers and using Merkle proofs to verify inclusion
SPV clients download block headers and verify that a transaction is included in a block using its Merkle proof path.
Question 6: What is the difference between a coin and a token in the blockchain ecosystem?
- Coins are digital; tokens are physical representations of assets
- Coins have their own native blockchain; tokens are built on top of an existing blockchain (Correct answer)
- Tokens are used only for governance; coins are used only for payments
- Coins require mining; tokens require staking
Correct answer: Coins have their own native blockchain; tokens are built on top of an existing blockchain
Coins (like BTC, ETH) operate on their own blockchain, while tokens (like ERC-20 tokens) are created and run on an existing blockchain platform.
Question 7: What does 'trustless' mean in the context of blockchain systems?
- Participants do not need to trust each other because the protocol enforces rules cryptographically (Correct answer)
- The network operates without any security protocols
- Users are anonymous and their identities are never verified
- Transactions are processed without any validation
Correct answer: Participants do not need to trust each other because the protocol enforces rules cryptographically
Trustless means the system's rules are enforced by math and code rather than requiring participants to trust each other or a central authority.
Blockchain Technology Core Concepts 3
What is the role of a cryptographic hash function's 'avalanche effect' in blockchain security?