Blockchain Technology Core Concepts 5 — Questions and Answers
Question 1: What is the significance of the 'longest chain rule' (Nakamoto Consensus) in Bitcoin?
- Blocks with the most transactions are always prioritized
- Nodes always follow the chain with the most cumulative proof-of-work as the valid chain (Correct answer)
- The chain that has been running the longest in time is considered valid
- Validators vote on which chain is longest at each epoch
Correct answer: Nodes always follow the chain with the most cumulative proof-of-work as the valid chain
Nodes adopt the chain representing the greatest cumulative computational work, making it economically infeasible for attackers to rewrite history.
Question 2: How does sharding improve blockchain scalability?
- By compressing transaction data using zlib
- By splitting the network into smaller partitions that process transactions in parallel (Correct answer)
- By offloading transactions to centralized servers during peak demand
- By reducing block time to one second
Correct answer: By splitting the network into smaller partitions that process transactions in parallel
Sharding divides the blockchain state and transaction load across multiple shards that process transactions simultaneously, increasing overall throughput.
Question 3: What is the difference between on-chain and off-chain transactions?
- On-chain transactions are public; off-chain are private but both settle immediately on the blockchain
- On-chain transactions are recorded directly on the blockchain; off-chain occur outside the blockchain and may settle later (Correct answer)
- Off-chain transactions require mining; on-chain do not
- On-chain transactions use tokens; off-chain use coins
Correct answer: On-chain transactions are recorded directly on the blockchain; off-chain occur outside the blockchain and may settle later
On-chain transactions are broadcast and recorded on the main blockchain, while off-chain transactions (e.g., Lightning Network) happen externally and only settlement may be recorded on-chain.
Question 4: What does 'deterministic wallet' (HD wallet) mean in blockchain?
- A wallet that only accepts deterministic transaction amounts
- A wallet that generates all key pairs from a single master seed phrase in a predictable tree structure (Correct answer)
- A wallet that uses fixed public keys that never change
- A wallet validated by miners before use
Correct answer: A wallet that generates all key pairs from a single master seed phrase in a predictable tree structure
HD (Hierarchical Deterministic) wallets derive an unlimited number of key pairs from one seed phrase, making backup and recovery simpler.
Question 5: What problem does a blockchain oracle solve?
- It predicts the price of cryptocurrencies for traders
- It provides smart contracts with real-world external data that the blockchain cannot access natively (Correct answer)
- It validates transactions faster than standard nodes
- It generates random numbers for consensus selection
Correct answer: It provides smart contracts with real-world external data that the blockchain cannot access natively
Oracles bridge the gap between blockchains and the external world, feeding smart contracts data like prices, weather, or sports results.
Question 6: What is the 'block reward halving' event in Bitcoin, and what is its economic purpose?
- A scheduled event that doubles transaction fees to fund network security
- A periodic reduction of the Bitcoin mining reward by 50%, controlling the issuance rate toward a fixed supply cap (Correct answer)
- A community vote to reduce miner income during bear markets
- An automatic adjustment triggered when Bitcoin's price doubles
Correct answer: A periodic reduction of the Bitcoin mining reward by 50%, controlling the issuance rate toward a fixed supply cap
Every ~210,000 blocks (~4 years), Bitcoin's block reward halves, slowing new coin issuance and enforcing the 21 million BTC supply cap.
Question 7: In blockchain networks, what is the purpose of a mempool (memory pool)?
- A database storing all finalized blocks permanently
- A temporary holding area where unconfirmed transactions wait to be selected by miners into a block (Correct answer)
- A pool of staked tokens used for validator selection
- A caching layer that stores frequently accessed wallet balances
Correct answer: A temporary holding area where unconfirmed transactions wait to be selected by miners into a block
The mempool is each node's local queue of broadcast but unconfirmed transactions awaiting inclusion in the next block.
Blockchain Technology Core Concepts 5
What is the significance of the 'longest chain rule' (Nakamoto Consensus) in Bitcoin?