Blockchain Interview Questions

Blockchain Interview Questions

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Updated on Oct 12, 2023 18:02 IST

The below article goes through the most common blockchain interview questions asked. The questions are divided into 3 categories of basic, intermediate, and advanced level blockchain questions. 

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Contents

Let’s begin with Blockchain Interview Questions for your preparation.

Basic Blockchain Interview Questions

Ques 1: How would you explain blockchain to a layman?

Ans: Blockchain is like a ledger that permanently stores the transaction records. However, instead of recording the transaction on paper or databases, the blockchain keeps them in cryptographic linearly connected blocks. The cryptographically connected blocks make blockchain transactions traceable and secure.

Blockchain is a decentralized network with a peer-to-peer (P2P) connection among nodes (or systems). Here, each node keeps the exact same copy of transaction records, making it hard to alter by any network intruder. 

Points to highlight while explaining Blockchain:

  • Blockchain is a decentralized distributed database with immutable records.
  • It’s a chain of blocks containing transactional records.
  • The blocks are linearly connected using the previous hash of the block.
  • The transactions are transparent and traceable to the network.
  • In a blockchain network, nodes (or systems) are connected peer-to-peer (P2P).

Also, Read: How does Blockchain work?

Ques 2: What are Consensus Mechanisms? And how do they work? 

Ans: Consensus mechanisms are the algorithms that work as an agreement among network participants to accept the next update on the network. Such as which block should get added next to the blockchain. These are the set of rules to keep network nodes synchronized on upcoming changes to the network.

The purpose of the Consensus mechanism is to allow a group of independent nodes to distribute the right to update and validate the change in the network equally. Therefore, decide on the following change of a decentralized network.

Ques 3: What is the difference between Bitcoin and Ethereum?

Ans: Bitcoin and Ethereum are renowned blockchain networks.

Bitcoin Ethereum
Founders Satoshi Nakamoto in 2008 Vitalik Buterin in 2013
What are they? Cryptocurrency A Cryptocurrency and introduced the Smart Contracts concept.
Release Method Genesis Block Mined by Satoshi Ether was on Presale
Cryptocurrency Used Bitcoin Ether
Cryptographic Hash Function Used SHA-256 Ethash
Block Time to Mine 10 Minutes 12-14 Seconds
Scalable Not yet Yes
Turing Test Bitcoin is Turing incomplete Ethereum is Turing complete

Note: Turing Complete is a machine given enough time and memory along with the necessary instructions, that can solve any computational problem, no matter how complex.

Ques 4: What is the difference between Proof-of-Work (PoW) and Proof-of-Stake (PoS)?

Ans: Following are the differences between Proof of Work (PoW) and Proof of Stake (PoS):

Proof of Work (PoW) Proof of Stake (PoS)
PoW validates a block based on computational work done. PoS validates a block based on stakes by validators.
Proof of Work uses the concept of Hashing to find the correct block hash. Proof of Stake uses the concept of Digital Signing to ensure the person who staked coins.
The first miner who can solve the cryptographic problem gets the reward.  Here, Validators receive network fees as rewards.
A Competition occurs between miners to solve the puzzle first. Here, the chosen validator gets to add its block. Hence, no competition.
Hackers need 51% computation power of the whole network to attack the security system by PoW. Hackers need to own 51% cryptocurrency of the entire network to attack the security system by PoS.
PoW systems consume a lot of energy and are expensive yet proven solutions. PoS is a cost-efficient and energy-efficient solution. Yet requires more research.
PoW can achieve more scalability as all nodes in the network are involved. Here, the complete network is not participating in the verification part.
PoW requires high-tech computational hardware. PoS requires staking coins and reputation within the network.

Ques 5: What are the various types of Blockchains?

Ans: There are 3 types of blockchains:

  • Public/Permissionless Blockchain: These are publicly accessible and follow a consensus mechanism to protect against malicious intruders. No one party can’t dominate the network’s working here. Ex: Bitcoin, Ethereum, etc.
  • Private/Permissioned Blockchain: Here, network participants are invite-only. The transactions in private blockchains are only visible to network members. Private blockchains are controlled and more synchronized. Ex: Hyperledger, Ripple, etc.
  • Consortium/Hybrid Blockchain: These blockchains include both private and public nodes or network participants. The pre-selected private nodes (such as selected companies) control the consensus mechanism of the network. Ex: Corda, Multichain, etc.

Intermediate Blockchain Interview Questions

Ques 6: What is a Block in Blockchain?

Ans: Block in a Blockchain–

  • A blockchain is a linear sequence chain of blocks.
  • Here, each block contains a set of transactions and block information.
  • These blocks are linearly connected and secured using cryptographic hashing.
  • Each block has a header that includes the previous block hash, block hash, nonce, Merkle root, difficulty, and other essential block details.
  • All blocks are connected linearly using the previous block hash.
  • The previous block hash uses to calculate the current block hash.
  • The first block mined with no previous block hash is called “Genesis Block.”

Ques 7: What is Merkle Tree? And how is it used in Blockchain?

Ans: Merkle tree in blockchain helps verify the data integrity of transactions in a block. It is a tree data structure made up of hashes of transactions which ensures security and efficiency.

The structure of a Merkle Tree is a hierarchical way to represent hashes of the transactions.

  • Merkle Root (or Root Hash): Top node of the tree
  • Non-Leaf Nodes: Child hash nodes of transactions in between
  • Leaf Nodes: Child nodes or Transactions nodes

Also, Read – Merkle Tree in Blockchain

Ques 8: What are Smart Contracts and Decentralized Applications (dApps)? 

Ans: Smart contracts are the self-executing program that runs on fulfillment of the conditions coded in the program. dApps are built using smart contracts programs. dApps provide an interactive and responsive interface to the users.

Ques 9: Could you Name some popular platforms for developing blockchain applications?

Ans: Ethereum, Hyperledger, R3, Ripple, and EOS are a few of the blockchain frameworks to build decentralized applications.

Advanced Blockchain Interview Questions

Ques 10: How does blockchain use cryptographic algorithms?

Ans: Blockchain uses cryptographic hash functions or cryptographic algorithms (such as SHA 256) to secure each block and connect them linearly. In the blockchain network, each block contains its own block hash and a previous block hash that helps them to connect with each other securely.

Ques 11: What is Digital Signing in Blockchain? Explain.

Ans: It is a process to validate the authenticity and integrity of the document by the sender. In simple terms, it means to check that the document received is sent by the expected sender and that an intruder does not alter it. 

Digital Signing in Blockchain is a process to verify the user’s impressions of the transaction. It uses the private key to sign the digital transaction, and its corresponding public key will help authorize the sender.

Ques 12: What are on-chain and off-chain transactions?

Ans: On-chain transactions are the movement of cryptocurrency value inside the blockchain itself. These transactions are irreversible. For instance, if you want to transfer your Bitcoins to Ethereum, you first have to convert the Bitcoins to Ethereum and then transfer them.

On-chain transactions are slow and have higher conversion fees, which can eventually stop the currency transfer. As a solution, off-chain transactions are introduced. 

Off-chain transactions are the movement of cryptocurrency value outside the blockchain. They eliminate the need to convert cryptocurrency. Hence, easy to access cross-chain transactions and increase the number of transactions. 

Conclusion

The article covered a few commonly asked questions during the blockchain interview round. Hope, you enjoyed revisiting the blockchain concepts — All the best for your interview.

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