In this blockchain FAQs, we are presenting the most frequently asked question generally asked related by most of the people. These questions will definitely help you if you are having any doubt about this technology. After consulting with top industry experts in the field of blockchain and related technologies, some questions are collected in order to provide you with the best answers. Also, we have explained the topics in a detailed manner when you go through such questions for understanding blockchain in a better way.
Understanding blockchain and FAQs
Today, blockchain has become the latest buzzwords in the market as something that has started as an evolution is soon going to a revolution. The fortune of this ingenious technology is pretty bright, that is why the huge amount is invested by the investors. Thus, blockchain based products are presented by industry experts and tech enthusiasts every next day. So, this is the right time to dive in if you are planning to start your career in the blockchain as the technology is in its nascent state.
If you are looking for answer guides related to your questions, then you at the right place. Many reputed companies across the world are offering a lot of opportunities as the blockchain have a share market of about 79.6%. Therefore, in order to move ahead in your career in blockchain development, you still have some opportunities.
I have distributed the following questions into three sections for convenience and better readability, which are as follows-
• General blockchain FAQs
• Multiple choice blockchain questions
• Advanced blockchain questions
General blockchain questions
Q1. What do you know about blockchain?
This is one of the most common and important blockchain FAQs. With the invention of bitcoins( the first cryptocurrency), the following technology was discovered as it is a decentralized distributed database of immune records. There are plenty of companies in the present scenario who are using it because it is the most trusted approach. Yes, you can easily trust it in the long run as everything is secure as well as an open source approach.
Q2. Why is blockchain a trusted approach?
Due to many reasons, this technology can be trusted. Because of its open-source nature, it has a high compatibility with other business applications. When an online transaction is done, it provides high-end security, as well as the developers, are paying special attention in order to provide security to its end-users. Blockchain can easily be considered, no matter what type of business one owns.
Q3. What is encryption? What is its role in blockchain?
In order to keep the data of organizations secure, encryptions is basically an approach to which organizations go for because what is always matters? It is the data security. Before the data is sent out of a network by the sender, the encrypted data is encoded or changed up to some extent, and also the information is only accessed by the authorized parties. In blockchain, this approach simply adds more to the overall security and authentication of blocks. Along with it, it also helps to keep them secure.
Q4. What do you mean by blocks in the blockchain technology?
Lists of records are constituted in the blockchain as it consists of blocks in order to store such records in following blocks. These blocks are attached or linked in turn with each other. Hence these blocks together form a chain called blockchain.
Q5. Is it possible to modify the data once it is written in a block?
No, it is not possible at all to do such modification. The organization simply has to erase or remove the information from all other blocks when such modification is required. While using this approach, data must be given the extreme care when you are left with no other options to be chosen.
Q6. Is it possible in blockchain to remove one or more block from the network?
Many users think that it is not possible, but yes it can be done. Only a specific portion of this online ledger is to be considered at many times. Surprisingly, the blocks can be removed from the network without making a lot of efforts. All you need to visit the default options and filters in order to get the answer of the following blockchain FAQ
Q7. What exactly do you know about the security of a block?
A strong cryptographic hash algorithm has protected a block or the entire blockchain such that each block has a unique hash pointer. The hash identifiers of the respective block will ultimately change when any modification is done the block. An excellent level of security is offered by it. Thus, the data stored in a block is extremely safe and secure as well such that you don’t need to worry about it.
Also read:Blockchain for beginners
Multiple choice blockchain questions:
Q1. Each block of a blockchain consists of which of the following?
(a) List of transaction
(c) A hash pointer to the previous block
Ans- All of the above
Q2. Bitcoin is based on which blockchain?
(d) Public permissioned
Q3. Which is the first distributed blockchain implementation among the following options?
Q4. Are blocks linked in the blockchain?
(a) Not linked with each other
(b) Forward to next block
(c) Backward to the previous block
Ans- Backward to the previous block
Q5. Blockchain can be stored as which of the following?
(a) A database
(b) A flat file
(C) Both of the above
Ans- Both of the above
Q6. Which cryptographic algorithm from the given options is used by hash identifying each block in the blockchain is generated?
Q7. The primary benefit of immutability is?
(b) Improved security
(c) Increased efficiency
Ans- Increased efficiency
Q8. Blockchain forks can result in which of the following?
(a) Multiple parent blocks
(b) Multiple children blocks
Ans- Multiple children blocks
Q9. A block in the blockchain can never have more than one parent block?
Q10. Which of the following from given options is asymmetric encryption Algorithm?
(b) Tripple DEA
Advanced blockchain questions
The advance questions in the article of blockchain FAQs are as follows-
Q1. What do you mean by RSA algorithm? How secure is this algorithm?
RSA Stands for Rivest, Shamir, and Adleman who first publically describe it. This Algorithm involves public key and a private key. This is the first algorithm to be suitable for signing and encryption.
Security of RSA- For attacking the RSA algorithm, following approaches are used such as-
• Brute force- All possible secret keys are involved in it.
• Mathematical attacks- They are using different techniques in mathematical attacks that is quite similar in efforts to factor the products of two primes.
Q2. What are off-chain transactions?
The movement of value outside of the blockchain called an off-chain transaction. Whereas, an on-chain is simply a transaction that modifies as well as depends on the blockchain in order to determine its validity. To record and validate the transactions, an off-chain transaction relies on various other methods.
Q3. What exactly do you understand by executive accounting? Does blockchain support the same?
A special type of accounting designed exclusively for a business offering services to the people known as executive accounting. With the executive accounting, a business can manage any services as there is no strict upper limit on services. Algorithms are constituted in the blockchain, which is special in handling executive accounting. In fact, it cut down many problems associated with the same.
Q4. What is the significance of blind signature? How is it useful?
Blind signature is the form of digital signature. Before it is being signed, the content of the message is disguised or blinded. This will result in the public verification of blind signature against the original, unblinded message in the manner of a regular digital signature.
The signer and message authorities are different parties in privacy-related protocols, and the blind signatures are typically employed in such protocols, for example- cryptographic election systems and digital cash schemes.
Q5. What is a secret sharing? Does it have any benefit in blockchain technology?
Secret sharing is an approach meant for the security as it matters a lot in digital transactions. In this technology, this approach divides personal or secret information into different units and sent them to the users on the network as well. When a participant to whom a share of the secret is allocated agree to combine the original information together with others. In blockchain technology, it offers plenty of security-related benefits.
Q6. What are the threats to the information you are familiar with?
The answer of particular blockchain FAQ familiarizes you with lots of threats available to the information. Many hackers have become active as well as adopting new approaches to hack information and servers containing financial information due to increase in online transactions over the internet. Software attack, information extortion, identity theft as well as sabotage are some of the major threats. Apart from them, Trojan horses, worms, and viruses are other trouble creators.
Q7. What are the core requirements for a business blockchain?
A share ledger, smart contract functionality, privacy, and last trust are the core requirements for a business blockchain.
Present basics of blockchain to anyone
Today, everyone is watching this game-changing technology how it revolutionizing the way organizations conduct business transactions.
So, let’s get started with it by looking at some blockchain FAQs –how its network operates, how one can take advantage of it, but before understanding the basic, firstly, let’s look at a little background that is in order.
• What is a distributed ledger?
A type of database, which is shared, replicated as well as synchronized among the members of a decentralized network known as a distributed ledger. The exchange of assets or data among the various participants in the network is an example of the transactions that are recorded by the distributed ledger.
Participants agree as well as govern by consensus on the updates to the records in the ledger. There is no involvement of central authority or third-party mediator, for example- financial institution or clearinghouse. In order to make the ledger an auditable, every record has unique cryptographic signature and timestamp as well in a distributed ledger.
• The role of business ledgers
In a business network, economic activity takes place that spans geographical, national as well as jurisdiction boundaries in such a connected and integrated world. Where the participants in the marketplace such as producers, market makers, suppliers, consumers, and other stakeholders own, control, as well as exercise their rights, usually business network, come together in such a marketplace.
The entitlements on objects of value are known as assets, and they can be tangible as well as physical, such as homes, cars, or strawberries whereas intangible and virtual are deeds, stock certificates, and patents. Transfers of assets are such transactions that create value in a business network
Various participants are involved in transactions like buyers, sellers, and intermediaries such as banks, auditors, and notaries. The business agreements of such parties are recorded in ledgers. Typically, multiple ledgers are used by businesses in order to keep track of ownership of assets as well as transfer between the participants. The economic activities and interest of a business are recorded in a system called ledger.
• Problems with current business ledgers
Today, various current business ledgers that are in use are deficient in some ways. Why are they called deficiently? Well, they are quite costly, inefficient as well as subject to tampering. Susceptibility to corruption and fraud, and lack of transparency results in disputes. Reversing transactions or provide insurance for transactions is costly enough. That is why many businesses missed opportunities due to such risks and uncertainties.
Furthermore, faulty business decisions are made by participants due to temporary or incorrect data as out-of-sync copies of business ledgers on each network participant’s own system lead to such decisions. The different copies of the ledgers are reconciled when the ability to make a fully informed decision is delayed.
• What is blockchain exactly?
The transactions are recorded in a public or private peer-to-peer network by a shared digital ledger called blockchain. The information is shared with all member nodes in the network when the ledger permanently records information in a sequential chain of cryptographic blocks linked with hash, history of assets exchanges that take place between the peers in the following network. I hope this answer is the perfect guide to the following blockchain FAQ
In a blockchain, various blocks that are attached to each other. All the confirmed and validated information are stored in such blocks. Therefore, the blocks are chained from the beginning of the chain to the most current block results in the formation of the blockchain. The game-changing technology acts as a single source of truth. Also, only those transactions can be seen by the members of the network that are relevant to the members.
Apart from it, there is private as well as public blockchain. In private blockchain, information is shared between some authorized members while the information can be seen publically in public blockchain.
• How does a blockchain network work?
In a blockchain network, rather than rely on the third parties such as banks or financial institutions, the members use a consensus protocol to agree on digital signatures, ledger content as well as cryptographic hashes in order to ensure the integrity of transactions.
The risk of fraudulent activities can be lowered by consensus because the tampering would occur across many places simultaneously. The transactions are not originated from the imposters, but the senders are ensured by the digital signatures. Finally, the alteration to transaction input even to the most such as minuscule change will result in different hash being computed is ensured by, for example- an SGA256 computational algorithm- cryptographic hashes.
Any single participant or even a group of participants can be prevented from controlling the underlying infrastructure or undermining the entire system with the use of decentralized peer-to-peer blockchain network. All the participants such as individuals, state actors, organizations, or a combination of all these types of participants get the equal opportunity, adhering to the same protocols.
The chronological order of transactions with all nodes agreeing on the validity of transactions is recorded by the system with the consensus model that has been chosen. Unless all the members in the network are agreed to the change, it is not possible to be altering or reversing the subsequent transaction.
• What are the business benefits of blockchain?
You need to know about the benefits in order to get informed about the blockchain FAQs. The participants in legacy business networks maintain their own ledgers will discrepancies as well as duplication will lead to disputes, increased settlement times, and the need for intermediaries such as financial institutions with their associated overhead costs. However, businesses can save time and costs while reducing risks by using blockchain-based shared ledgers where transactions cannot be altered once validated by consensus and also written to the ledger.
The benefits of consistent as well as a consolidated database with reduces errors and the flexibility provided to participants for changing the descriptions of the assets they own are provided by the consensus mechanism of the blockchain.
This technology leads to increased trust and integrity in the flow of transaction information among the participating members as not a single participant member owns the source of origin for information that is contained in the shared ledger. Lowered cost of the audit and regulatory compliance with improved transparency can be provided by blockchain immutability mechanism. Businesses get benefits from increased speed of execution, less risk, and reduced costs because with the use of this technology, contracts are being executed on business networks are automated and final as well. All the benefits enable the businesses to build new revenue streams for interacting with clients.
• What’s a good blockchain use case?
The practical uses of the technology in the business world extend far beyond the cryptocurrency transactions, for example- rather than days, blockchain networks allow securities trades to be settled in minutes in finance.
Ask these questions for determining whether your case is a good fit for blockchain-
• Is a provenance, audit trail required?
• Is a business network involved?
• Should dispute resolution be final?
• Must the record of transactions be immutable, or tamper proof?
• Is a consensus used to validate transactions?
If your answer is yes to at least two questions, then this technology would benefit your use case. The network can take many forms such that the network always needs to be involved for blockchain to be the right solution. Many forms of the network include- the network can be within an organization, or between the organizations. A blockchain network could be used to create an audit or compliance network or to share reference data between divisions within an organization. Between the individuals, the network can also exist who might need to store data, digital assets, or contracts on the blockchain technology, for example- how diverse organizations in banking and financial markets, healthcare as well as in transportation –adopting the following technology in order to support new business models.
• Enterprise blockchain requirements
The game-changing technology can transform the business networks. Also, this innovation collaborating with other technology companies and industries happens in open. The industrial-grade blockchain technologies have characteristics such as cryptography that ensures authentication and integrity of transactions, and chain code (also called mart contracts) encapsulates the participants in terms of agreement for the business. In the blockchain, chain code is placed on the validating peer nodes.
Along with these attributes, various other key industry requirements such as verified identify, performance, as well as private and confidential transactions, needs to be met by the enterprise blockchain technology. In order to meet these needs, Hyperledger Fabric has been architected. The Hyperledger Fabric also allows businesses to select an optimal algorithm for their networks such that it is designed with a pluggable consensus model.
Thus, a new way to transact business is represented by blockchain technology. The technologies such as cryptographic security, decentralized consensus, and a shared public ledger can profoundly change the way we generally used to organize our economic, social, political as well as scientific activities. I hope this article about the blockchain FAQs was pretty helpful to you.
Also read:Blockchain technology in telecom