CCE Blockchain Fundamentals & Architecture 4 — Questions and Answers
Question 1: What is the 'difficulty adjustment' mechanism in Bitcoin's Proof-of-Work?
- A fee adjustment that penalizes miners who produce empty blocks
- An automatic recalibration every 2,016 blocks to keep average block time near 10 minutes (Correct answer)
- A manual update by Bitcoin Core developers when hash rate changes
- A smart contract that dynamically prices block space based on mempool size
Correct answer: An automatic recalibration every 2,016 blocks to keep average block time near 10 minutes
Every 2,016 blocks (~2 weeks), Bitcoin adjusts the PoW target so that if blocks came faster than 10 minutes the difficulty increases, and if slower it decreases.
Question 2: In an account-based blockchain model (like Ethereum), how are balances tracked compared to Bitcoin's UTXO model?
- Balances are stored as sets of signed receipts from previous senders
- Global state maps each address to a running balance, debited and credited with each transaction (Correct answer)
- Balances exist only in the mempool until periodically settled to the chain
- Each account maintains its own independent local chain of transactions
Correct answer: Global state maps each address to a running balance, debited and credited with each transaction
Ethereum's account model stores a global state trie mapping addresses to account objects (balance, nonce, code hash), making balance checks simpler but requiring global state management.
Question 3: What is a 'blockchain oracle' and why is it needed?
- A node that predicts future block hashes for mining optimization
- An external data feed service that provides real-world information to smart contracts (Correct answer)
- A governance tool that resolves disputes between competing blockchain forks
- A hardware security module that signs blocks on behalf of validators
Correct answer: An external data feed service that provides real-world information to smart contracts
Smart contracts cannot access off-chain data on their own; oracles (e.g., Chainlink) securely bridge real-world data (prices, weather, sports results) onto the blockchain for contract execution.
Question 4: What is the significance of the 'coinbase transaction' in each Bitcoin block?
- It is the transaction that pays the Coinbase exchange's withdrawal fee
- It is the first transaction in a block that creates new Bitcoin as block reward for the miner (Correct answer)
- It is the transaction used to burn tokens when difficulty increases
- It is a mandatory transaction verifying the block's Merkle root
Correct answer: It is the first transaction in a block that creates new Bitcoin as block reward for the miner
The coinbase transaction has no inputs and creates new BTC (block subsidy + fees) paid to the miner's address — it is the only transaction allowed to create coins from nothing.
Question 5: What problem does the Lightning Network solve in Bitcoin?
- It replaces SHA-256 mining with a more energy-efficient algorithm
- It enables fast, low-fee off-chain payments via bi-directional payment channels settled on-chain (Correct answer)
- It shards the Bitcoin blockchain to process more transactions per block
- It provides zero-knowledge privacy for all on-chain transactions
Correct answer: It enables fast, low-fee off-chain payments via bi-directional payment channels settled on-chain
Lightning Network creates a Layer-2 network of payment channels where parties transact off-chain and only broadcast the opening and closing transactions on Bitcoin's base layer.
Question 6: What is 'block propagation' and why does it matter for blockchain security?
- The process of miners advertising new block templates to the network before solving them
- The time it takes for a newly mined block to reach all network nodes; slower propagation increases fork risk (Correct answer)
- The mechanism by which light clients download block headers from full nodes
- The method used to compress block data before broadcasting to save bandwidth
Correct answer: The time it takes for a newly mined block to reach all network nodes; slower propagation increases fork risk
Slow block propagation increases the chance of temporary forks because two miners may solve blocks before either hears of the other's solution, wasting hash power and risking chain reorganization.
Question 7: In the context of blockchain, what is a '51% attack'?
- An attack that exploits a bug in 51% of smart contracts on the network
- An attack where a single entity controls the majority of mining/staking power and can rewrite recent history (Correct answer)
- A social engineering attack targeting 51% of a protocol's development team
- A Sybil attack that creates 51% of network nodes to censor transactions
Correct answer: An attack where a single entity controls the majority of mining/staking power and can rewrite recent history
A 51% attack occurs when one entity controls over half the network's hash rate (PoW) or stake (PoS), enabling double-spend attacks by reorganizing recent blocks.
CCE Blockchain Fundamentals & Architecture 4
What is the 'difficulty adjustment' mechanism in Bitcoin's Proof-of-Work?