FREE Cryptocurrency Blockchain Technology Fundamentals Questions and Answers

Question 1

A development team is launching a new cryptocurrency designed to minimize energy consumption.
Instead of requiring intensive computational work, the protocol selects validators to create new blocks based on the amount of currency they have staked as collateral.
Which consensus mechanism does this describe?

Accepted Answer

Proof-of-Stake (PoS)

Answer

Proof-of-Work (PoW)

Answer

Proof-of-Authority (PoA)

Answer

Proof-of-Burn (PoB)

Question 2

Within a standard blockchain block header, what is the data structure that is created by recursively hashing pairs of transaction IDs together to efficiently summarize and verify the integrity of all transactions in the block?

Accepted Answer

Merkle Root

Answer

Transaction Ledger

Answer

Nonce

Answer

Genesis Hash

Question 3

Which of the following is a primary characteristic that distinguishes a private or permissioned blockchain from a public blockchain like Bitcoin?

Accepted Answer

The requirement for participants to be vetted and granted access.

Answer

The use of cryptographic hashes to link blocks chronologically.

Answer

The ability for the ledger to be distributed across multiple nodes.

Answer

The immutable nature of recorded transactions.

Question 4

What is the fundamental purpose of a smart contract on a blockchain?

Accepted Answer

To act as a self-executing agreement with predefined rules.

Answer

To provide a user-friendly interface for wallet applications.

Answer

To encrypt all transaction data for maximum privacy.

Answer

To store large files in a decentralized manner.

Question 5

A user controls a single Unspent Transaction Output (UTXO) worth 5 ETH. They initiate a transaction to send 1 ETH to a friend. In a UTXO-based blockchain, how is this transaction typically processed?

Accepted Answer

The original 5 ETH UTXO is consumed, and two new UTXOs are created: one for 1 ETH to the friend and one for approximately 4 ETH back to the sender as change.

Answer

The original 5 ETH UTXO's value is updated to 4 ETH, and a new 1 ETH UTXO is created for the friend.

Answer

The transaction is rejected because the UTXO value does not exactly match the amount being sent.

Answer

A 1 ETH portion is 'chipped off' the 5 ETH UTXO, leaving the original UTXO intact with a reduced balance.

Question 6

The 'Blockchain Trilemma' refers to the widely held belief that it is difficult for a decentralized network to optimize three key properties at once. Which of the following correctly lists these three properties?

Accepted Answer

Decentralization, Security, and Scalability

Answer

Speed, Cost, and Anonymity

Answer

Immutability, Transparency, and Usability

Answer

Mining, Staking, and Hashing