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Table of contents
1.
Introduction
2.
Easy-Level
3.
Medium-Level
4.
Hard-Level
5.
Conclusion
Last Updated: Mar 27, 2024

Blockchain Interview Questions

Author Vikash Kumar
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Introduction

Blockchain is a distributed, permanent ledger(file) that enables us to keep track of assets in a corporate network and record transactions. Blockchain's core feature prevents data modification, making it more secure for businesses like cybersecurity, payments, and others where data security is more vital.

Blockchain introduction image

Blockchain is a rapidly developing technology that has helped us increase data sharing among social networks or commercial networks' security, trust, transparency, and trackability. In this article, we will discuss some most-asked blockchain interview questions.

Also Read, Pandas Interview Questions and  Operating System Interview Questions

Easy-Level

 

Let's see some easy-level blockchain interview questions.

1. Explain Blockchain technology. 

Ans: A Blockchain is a type of distributed ledger. DLT, or distributed ledger technology, enables the sharing of records among numerous computers, or "nodes." A node can be any blockchain user, but it requires a lot of computing power to run. Nodes store data in the ledger and check, authorize, and save it. This differs from conventional record-keeping techniques, which preserve data in a single location, such as a computer server. A blockchain divides newly contributed data into blocks or collections of data. New blocks are continuously added to the ledger, forming a chain because each block carries a certain amount of data.
 

2. What are blocks in blockchains? 

Ans: Blocks are data structures found in the blockchain database and are used to store transaction data permanently. A block stores all the transactions made on the network. The block is closed after the data in the block are authenticated and chained to the blockchain. Then, a new block is made to verify further transactions and add to the blockchain.
 

3. Explain the key features of blockchain? 

Ans: The key features of blockchain are

  • Decentralization: Decentralization refers to transferring control and authority from a centralized entity (an individual, an organization, or a group) to a distributed network. 
  • Immutability: Once someone has added a transaction to the ledger, it cannot be changed by another participant. 
  • Greater Security: Data is always circulated via several nodes because blockchain functions on a distributed network of nodes, ensuring that the integrity of the original data is not hindered.
  • Consensus: Blockchain technologies are particularly effective because of the consensus algorithm. It is a decision-making mechanism(based on majority wins) for the network's active nodes. 
     

4. What is mining in blockchain? 

Ans: Blockchain mining is the process of adding new transactions to the distributed ledger of transactions already present in a blockchain. Mining includes establishing a hash of a block of transactions that is difficult to tamper while maintaining the integrity of the entire blockchain without the need for a central system.

5. Why are coins or tokens necessary in blockchain?
Ans: The states employ tokens or coins as a medium of exchange. They are digital assets integrated into a blockchain to carry out a certain task. Coins are transferred from one address to another when someone makes a transaction, changing their state. In addition, transactions include some extra data that can be changed when a state changes. Because of this, blockchains require money or tokens to incentivize users to join their networks.


6. How can users modify data in blockchain?

Ans: Users cannot change the data that is already in the blockchain. Existing entries cannot be deleted or modified. This aids in the prevention of data manipulation.


7. What encryption algorithm is employed by the Bitcoin Blockchain?

Ans: Different blockchains use different encryption methods. The Bitcoin Blockchain uses the SHA256 Hashing algorithm.


8. What Are Private Keys?

Ans: Private keys are used to secure an address. The owner should keep it secure because anyone who has it transfers ownership to the person who possesses it. Bitcoin keys, in particular, have a 256-bit string that appears as a combination of letters and numbers. It's kept in your crypto wallet, allowing you to access your Bitcoin whenever you want.


9. What exactly is a public key?

Ans: Unlike a private key, a public key is intended to be shared with others so that they can transfer your cryptocurrency. It is associated with the owner's private key, which is required to "unlock" the public key. Because Bitcoin addresses are effectively compressed versions of the public key, they are sometimes utilized for transactions instead.


10. What distinguishes a dApp from an app?

Ans: Apps generally aren't made to function in a decentralized environment, but dApps run on a decentralized network or system. dApps are the next-generation applications that use blockchain technology and are built on it. NEO and Ethereum are two well-known blockchain platforms that allow dApps.

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Medium-Level

 

Now, we will see some medium-level blockchain interview questions.

11. What exactly is Bitcoin?

Ans: A bitcoin is a kind of digital currency that can be bought, sold, and transferred securely between two persons via the internet. Although it cannot be touched or seen, it can be traded electronically. As a virtual currency, we can store it in our phones, computers, or any other storage medium.

12. What are smart contracts in blockchain? 

Ans: Smart contracts are programs that are kept on a blockchain and run when certain criteria are satisfied. They are often used to automate the working of an agreement so that all participants can be certain of the conclusion immediately, without the involvement of any third-party organization or time loss. Smart contracts operate on executing basic "if/when...then..." statements encoded into blockchain code. They have the ability to automate a workflow, triggering the next action when certain conditions are satisfied.


13. List some of the blockchain platforms.

 Ans: Some famous blockchain platforms are:

  • Avalanche
  • Ethereum
  • Ripple 
  • IBM Blockchain
  • Chainalysis KYT
  • Cardano
  • Solana 
  • Hyperledger Fabric.


14. Explain different types of blockchain networks.

Ans: Different types of blockchain networks are

  • Public blockchain networks

A public blockchain, like the one used by Bitcoin, is one that anybody can join and use. Potential disadvantages include

  • The need for a lot of computational power.
  • A lack of privacy for transactions.
  • Weak security.
     
  • Private blockchain networks

A decentralized peer-to-peer network, a private blockchain network, is similar to a public blockchain network. A single organization, however, controls the network's governance, executing a consensus procedure and managing the shared ledger.

  • Permissioned blockchain networks

Businesses that create a private blockchain typically create a network that is authorized. As a result, there are limitations on which transactions and who can participate in the network.

  • Consortium blockchains

A blockchain can be maintained by multiple organizations. These pre-selected organizations decide who can submit transactions and access the data.
 

15. What are the differences between a traditional contract and a smart contract?  

Ans:

Traditional Contract

Smart Contract

Time Consuming Fast and Efficient
Require a third party for authentication No third party is needed for authentication
Mutable bt anyone Immutable
Physical presence is required(Wet signature) No need of physical presence(Digital signature)
Expensive Cheaper comparatively
Legal Identity of the parties Pseudonymous


16. What is Mempool?

Ans: The mempool acts as a waiting area for unmined blockchain transactions. These transactions have been validated but still, need to be added to the blockchain. The phrase "mempool" is a contraction of "memory" and "pool," and it refers to a node's storage area where validated transactions wait to be mined and added to the blockchain.
 

17. What Exactly Is the Ethereum Network? Explain. 

Ans: Ethereum is a second-generation distributed ledger technology based on the bitcoin network. It was first introduced in 2015 and has since grown in popularity. It is an open-source public distributed ledger technology. It is technically an operating system with features such as smart contracts, transaction-based state transitions, and virtual machines.
 

18. What is EVM?  

Ans: EVM is an abbreviation for Ethereum Virtual Machine. It is a decentralized virtual machine that can run scripts over the public node network. It is also Turing complete, with Gas serving as an internal pricing mechanism.


19. What do you mean by "Bitcoin Mining"?

Ans: Bitcoin mining is the digital equivalent of gold mining. The technique necessitates the use of specialized computers capable of solving algorithmic equations. These machines assist miners in authenticating blocks of transactions kept within each network. Miners that confirm and authenticate transactions on the blockchain are rewarded in Bitcoin. These miners can generate new coins, which will continue until the last Bitcoin is discovered.


20. Explain the Use Cases for Smart Contracts.

Ans: There are numerous applications for smart contracts. It can be utilized in real estate, for example, where a seller can put up a smart contract to sell properly. Once the buyer transfers the property amount, the property can be transferred to him.

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Hard-Level


Here are some hard-level blockchain interview questions.

21. What is the significance of a nonce in blockchain?

Ans: A nonce is a random 32-bit value that miners use as the basis for their hash computations in numerous proof-of-work blockchains, including Bitcoin. Miners compete against one another to guess a correct nonce while attempting to calculate a block hash. A block hash is similar to a reference number for a block in the blockchain. This reference number must meet certain criteria, such as beginning with a specific amount of zeroes.
 

22. How does Proof of Work(Pow) work in blockchain?

Ans: Adding a new block to the chain is seen as an update to the present system. As a result, approval from network participants is required. Proof-of-Work (PoW), a consensus process, is used to determine whether or not to add a new block. Only transactions that have been verified are added to the network. Most of the proposed blocks are considered invalid by the network. The Blockchain protocol defines block validity. The protocol manages an arbitrary "Difficulty" parameter on a Blockchain network, which alters how difficult it is to mine a block.

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23. What is Hashing, and why is it used in blockchain?

Ans: Hashing refers to the technique of having an input item of any length reflect an output item of a specific length. One such example is Bitcoin's SHA-256 algorithm. SHA-256 hashing always produces an output result of a fixed, i.e., 256 bits (32 bytes).

Since hashing provides each block in the blockchain with a unique identity, altering the blockchain will have inescapable consequences. The block's header contains information that serves as its identity. A large number of components are required to build the block. As a result, when a blockchain hash occurs, the data is transformed into a distinct string within a block.
 

24. What Is the Difference Between the Bitcoin and Ethereum Blockchains?

Ans: The significant difference between the Bitcoin and Ethereum Blockchains is how they operate and the capabilities they offer. Bitcoin is a first-generation blockchain technology that serves as the decentralized ledger's foundation. Ethereum, on the other hand, extends the capabilities of Bitcoin by delivering a more scalable and programmable blockchain system. Ethereum smart contracts and the capacity to develop and implement distributed apps are available (dApps).
 

25. Why are hard forks and soft forks necessary in blockchain?

Ans: Blockchain requires both hard and soft forks to upgrade and improve the network. While soft forks are softer modifications that are backward compatible, hard forks need significant changes to the blockchain's regulations. Both kinds of forks are necessary to enhance the network's performance, fix security issues, and resolve user disputes.
 

26. What Are the Primary Business Steps in Smart Contract Development?      

Ans: While developing smart contracts, many important actions must be taken. The procedures are as follows.

  • Confirm that your company truly needs smart contract development.
  • Understand the smart contract's restrictions.
  • Organize the development's implementation.
  • Employ the services of a competent contract developer.
  • Perform thorough testing before implementing the smart contract.


27. What are crypto wallets? How are they useful?

Ans: Crypto wallets make your private keys safe and accessible by storing them. They also enable the sending, receiving, and spending of cryptocurrencies such as Bitcoin and Ethereum.

Crypto wallets can be used for

  • Managing all digital assets in one safe location.
  • Controlling private keys.
  • Sending and receiving cryptocurrency from any site on the planet.
  • Using usernames instead of long, hexadecimal "public key" addresses.
  • Examining dapps (decentralized apps).
  • For shopping at cryptocurrency-accepting merchants.


28. How is quantum computing a threat to blockchain technology?    

Ans: Quantum computing is a significant barrier to blockchain technology. It is threatening the immutable nature of blockchain. Quantum computing can reverse-engineer the blockchain network's public key in order to find the private keys needed to compromise the system. It is unquestionably a significant challenge in this area and might impact approximately 50% of blockchain.
 

29. Is blockchain hackable? 

Ans: For the most part, the blockchain is pretty safe. It is not entirely secure, though. Hackers are capable of carrying out a wide range of hacking operations. Examples include the Sybil attack, the Routing attack, the Direct Denial of Service, and others. 
 

30. What is 51% attack?

Ans: A 51% attack is when a group of miners with more than 50% of the network hash rate manipulates new transactions by either stopping them from completing or getting confirmations or by reversing already confirmed transactions and essentially performing a double spend. Although it is extremely rare, it is feasible to do so in the current period.

Conclusion

In this article, we discussed the most-asked blockchain interview questions. Hope, from these blockchain interview questions, you got a clear idea of the range of questions asked in interviews.

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