CCE Blockchain Fundamentals 5 — Questions and Answers
Question 1: What is the purpose of a cryptographic hash function in blockchain?
- To encrypt wallet balances so only the owner can read them
- To produce a fixed-size, deterministic fingerprint of arbitrary data (Correct answer)
- To compress transaction data to reduce block size
- To generate random nonces for mining
Correct answer: To produce a fixed-size, deterministic fingerprint of arbitrary data
Hash functions like SHA-256 convert any input into a fixed-length digest; even tiny input changes produce completely different outputs, making tampering detectable.
Question 2: Which consensus mechanism is used by the Bitcoin network?
- Delegated Proof of Stake (DPoS)
- Proof of Authority (PoA)
- Proof of Work (PoW) (Correct answer)
- Byzantine Fault Tolerance (BFT)
Correct answer: Proof of Work (PoW)
Bitcoin uses Proof of Work, requiring miners to expend computational energy to find a hash below the network's difficulty target to add blocks.
Question 3: What is a 'UTXO' in Bitcoin's accounting model?
- A unique transaction ordering index assigned by the mempool
- An unspent transaction output that can be used as future input (Correct answer)
- A user token exchange output generated during atomic swaps
- An unsigned transaction awaiting miner confirmation
Correct answer: An unspent transaction output that can be used as future input
UTXOs (Unspent Transaction Outputs) are discrete coin amounts from prior transactions that serve as inputs when constructing new transactions.
Question 4: What is the 'blockchain trilemma' as described by Vitalik Buterin?
- The trade-off between speed, privacy, and regulatory compliance
- The challenge of simultaneously achieving decentralization, security, and scalability (Correct answer)
- The conflict between PoW, PoS, and PoA consensus mechanisms
- The impossibility of combining public, private, and consortium chains
Correct answer: The challenge of simultaneously achieving decentralization, security, and scalability
The blockchain trilemma states that achieving all three of decentralization, security, and scalability at once is extremely difficult; improving one typically weakens another.
Question 5: In the context of blockchain, what is a 'mempool'?
- A shared storage pool for archived block data
- A staging area where unconfirmed transactions wait before being included in a block (Correct answer)
- A memory-efficient data structure used to store Merkle roots
- A pool of staked coins locked in a validator contract
Correct answer: A staging area where unconfirmed transactions wait before being included in a block
The memory pool (mempool) holds broadcast transactions that have not yet been picked up and confirmed by miners or validators.
Question 6: What does 'decentralization' mean in a blockchain network?
- All nodes are located in a single geographic region for low latency
- Control and data are distributed across many independent nodes with no single point of authority (Correct answer)
- The network relies on a central server to distribute blocks
- Only certified institutions can run validating nodes
Correct answer: Control and data are distributed across many independent nodes with no single point of authority
Decentralization distributes control among many participants so no single entity can censor transactions, alter history, or shut down the network.
Question 7: What distinguishes a 'coinbase transaction' from regular transactions in Bitcoin?
- It requires a multi-signature scheme from all block validators
- It is the first transaction in a block that creates new coins and collects fees for the miner (Correct answer)
- It transfers coins between two exchange wallets with zero fees
- It records the hash of every transaction in the block as metadata
Correct answer: It is the first transaction in a block that creates new coins and collects fees for the miner
A coinbase transaction has no inputs; it is created by the miner to mint the block subsidy and collect accumulated transaction fees as their reward.
CCE Blockchain Fundamentals 5
What is the purpose of a cryptographic hash function in blockchain?