Chapter A1. Introduction to Blockchain Technology Flashcards
DESCRIBE the basic idea behind the blockchain concept
Blockchain is a decentralized, continuously growing list of record (called blocks) shared across a peer-to-peer network. This blocks are linked and secured using cryptography.
EXPLAIN the main differences between decentralized blockchain systems and traditional centralized networks
Decentralized blockchain systems: it is peer-to-peer and it has no single point of failure.
Traditional blockchain systems: It is server-based and it has a single point of failure.
DIFFERENTIATE between public and private blockchains
1) Public blockchain:
•Also called permissionlessor open blockchains
•Dispose of the middlemen; accessible by anyone with a computer & internet access
•Purely decentralized
•E.g. Ethereum, Bitcoin
2) Private blockchain:
•Also called permissioned or closed blockchains
•Permission network with a restricted group of known and trusted participants
•Used for internal processes within companies –or for processes between a limited set of companies
•E.g. Hyperledger Fabric, Ripple, Quorum
Who was Satoshi Nakamoto?
He laid out the framework for Blockchain and detailed method of using a peer-to-peer method to generate a financial database. He describes it as a system for electronic transactions without relying on trust.
When Satoshi Nakamoto mined the first bitcoin
transaction? and what was it called?
On January 2009, Satoshi Nakamoto mined the first bitcoin transaction: the Genesis Block (block number 0), which had a reward of 50 bitcoins.
What are the basic principles of blockchain technology?
- Distributed Database: The ledger is replicated in a large number of identical databases. Each participant in a blockchain has access to the entire database and no single participant controls the data or the information. Transaction records of a partner can be verified directly without a need for third-party intermediaries.
- Peer-to-Peer Transmission: Communication occurs directly between peers without the need for central coordination. Peer nodes simultaneously functioning
as both “clients” and “servers” to the other nodes on the network. - Transparency with Pseudonymity: Transactions occur between blockchain addresses and are visible to anyone with access to the system. When changes are entered in one copy, all other copies are simultaneously updated. Users on a blockchain have a unique alphanumeric address that identifies them. Users can remain anonymous or provide proof of their identity to others.
- Irreversibility of Records: Once a transaction is entered in the database, the records cannot be altered. Various computational algorithms are deployed to ensure that the recording on the database is permanent and available to all others on the network.
- Computational Logic: The digital nature of the ledger means that users can set up algorithms and rules that automatically trigger transactions between nodes.
- Transaction Speed: Transactions on the blockchain-based system are completed and verifiable within seconds without human intervention.
Blockchain is maintained by a ________ mechanism
consensus
Blockchain is also called distributed ______ technology.
ledger
There are two main types of blockchains: ______ and private blockchains.
public
The blockchain idea originated in the big financial crisis of 2008 as Satoshi Nakamoto published his white paper on _______, a peer-to-peer electronic cash system.
bitcoin
Each block contains:
a. a timestamp
b. transaction data
c. a cryptographic hash of the previous block
d. information from future blocks
a. timestamp
b. transaction data
c. a cryptographic hash of the previous block
A Blockchain is defined as…
…a decentralized, continuously growing list of records, called “blocks”
Transactions in a blockchain…
a. … are immediately transparent on the entire blockchain
b. … can be altered retroactively in a very easy way
c. … require the collusion of the network majority
d. … use cryptographic protocols
a, c and d
The World Economic Forum (WEF) found out that…
• 10 % of the global domestic product (GGDP) will be held in blockchain technology
• There are more than 1500 cryptocurrencies people can mine or exchange for
money.
Before the web…
we had the internet
