Crypto 1 Flashcards
What is a blockchain?
A blockchain is a type of distributed ledger technology that records transactions in a secure, immutable, and transparent manner. It operates across a decentralized network of nodes, eliminating the need for a central authority. Each block in the chain contains a set of transactions and is linked to the previous block using cryptographic hashes.
What are the three main components of a blockchain?
The three main components are blocks, nodes, and consensus mechanisms. Blocks store the transaction data, nodes are the network participants maintaining the ledger, and consensus mechanisms ensure all participants agree on the validity of the data. Together, they enable a decentralized, secure, and tamper-proof system.
What is a block in a blockchain?
A block is a unit of data storage in a blockchain that contains a group of transactions. It also includes metadata such as a timestamp, a reference to the previous block (hash), and a unique identifier for itself. Blocks are sequentially linked to create a secure and tamper-evident chain of data.
What does immutability mean in blockchain?
Immutability in blockchain means that once a transaction is recorded, it cannot be altered or deleted. This is achieved through cryptographic hashing and consensus mechanisms that ensure the integrity of the ledger. Immutability provides trust and transparency, as all transactions remain permanently accessible and verifiable.
What is a distributed ledger?
A distributed ledger is a database that is spread across multiple nodes or participants in a network. Unlike centralized systems, it does not rely on a single controlling entity, ensuring resilience and transparency. Each participant maintains a synchronized copy of the ledger, and updates are validated through consensus mechanisms.
What is a node in blockchain?
A node is a device, such as a computer or server, that participates in a blockchain network by maintaining a copy of the ledger. Nodes can perform various functions, such as validating transactions, storing data, and relaying information. They are essential for maintaining the decentralized and secure nature of the blockchain.
What is a consensus mechanism?
A consensus mechanism is a protocol used to achieve agreement among nodes in a blockchain network about the validity of transactions. It ensures that all participants maintain a consistent copy of the ledger and prevents malicious activities like double-spending. Common mechanisms include Proof of Work (PoW) and Proof of Stake (PoS).
Name two common consensus mechanisms.
Two common consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS). PoW involves solving complex mathematical puzzles to validate transactions, while PoS selects validators based on the amount of cryptocurrency they stake. Both mechanisms aim to secure the network and ensure data integrity.
What is Proof of Work (PoW)?
Proof of Work (PoW) is a consensus mechanism where participants (miners) solve computationally intensive puzzles to validate transactions and create new blocks. The first miner to solve the puzzle gets to add the block to the blockchain and is rewarded with cryptocurrency. This mechanism ensures security but requires significant energy and computing resources.
What is Proof of Stake (PoS)?
Proof of Stake (PoS) is a consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they hold and are willing to stake as collateral. This reduces the energy consumption associated with Proof of Work while maintaining network security. Validators risk losing their stake if they act maliciously, aligning incentives with network integrity.
What is a public blockchain?
A public blockchain is an open and permissionless network where anyone can participate as a node, validator, or user. Examples include Bitcoin and Ethereum, which are decentralized and accessible to anyone with an internet connection. Public blockchains prioritize transparency and security but may face scalability challenges.
What is a private blockchain?
A private blockchain is a restricted network where participation is limited to specific individuals or organizations. It is often used by businesses to maintain control over data while leveraging the benefits of blockchain technology, such as transparency and immutability. Private blockchains typically offer faster transaction processing but lack the decentralization of public blockchains.
What is a permissioned blockchain?
A permissioned blockchain is a hybrid between public and private blockchains, requiring participants to obtain approval before joining the network. It provides more control over access while still leveraging blockchain’s transparency and security features. Permissioned blockchains are commonly used in enterprise applications for supply chain management and financial systems.
What is a permissionless blockchain?
A permissionless blockchain is an open network where anyone can join, participate, and validate transactions without prior approval. These blockchains, like Bitcoin, rely on decentralized governance and consensus mechanisms to ensure security and trust. Permissionless blockchains prioritize inclusivity and transparency but may have slower transaction speeds compared to private networks.
What is decentralization?
Decentralization refers to the distribution of control and decision-making across a network, rather than being concentrated in a central authority. In blockchain, it ensures that no single entity can alter or control the entire system, enhancing trust and resilience. Decentralization reduces vulnerabilities to attacks and censorship, making systems more robust.
What is a hash function?
A hash function is a cryptographic algorithm that converts input data of any size into a fixed-length string of characters, called a hash. This process ensures data security, as the output is unique to the input. Hash functions are used in blockchain to link blocks together and verify the integrity of transactions.
What is a key feature of a hash function?
A hash function is deterministic, meaning the same input always produces the same output. It is also irreversible, so you cannot deduce the input from the output, and collision-resistant, meaning no two inputs produce the same hash. These properties make hash functions critical for ensuring blockchain security.
What is a Merkle tree?
A Merkle tree is a data structure that organizes data in a hierarchical manner, using hash functions to link the data. Each leaf node in the tree represents a hash of a transaction, while non-leaf nodes represent hashes of their child nodes. Merkle trees allow efficient and secure verification of data on a blockchain.
What is a Genesis block?
The Genesis block is the very first block of a blockchain, acting as the foundation for all subsequent blocks. It is often hard-coded into the blockchain software and does not reference a previous block. The Genesis block contains initial data or parameters to kickstart the network.
What is a transaction in blockchain?
A transaction in blockchain is the act of transferring value, data, or assets between parties, recorded on the blockchain. Each transaction includes details such as sender, receiver, and amount, along with a unique identifier. Once validated and added to a block, the transaction becomes immutable.
What is a miner in blockchain?
A miner is a participant in a Proof of Work blockchain who uses computational resources to validate transactions and solve cryptographic puzzles. Once a puzzle is solved, the miner gets to add the block to the chain and receives rewards, typically in the form of cryptocurrency. Miners play a crucial role in maintaining network security and integrity.
What is mining?
Mining is the process of validating transactions and adding them to the blockchain, specifically in Proof of Work systems. It involves solving complex mathematical problems to achieve consensus among network participants. Miners are rewarded with newly minted cryptocurrency and transaction fees for their work.
What is a smart contract?
A smart contract is a self-executing program stored on the blockchain that automatically enforces the terms of an agreement. It eliminates the need for intermediaries by triggering actions when predefined conditions are met. Smart contracts are used in applications like DeFi, NFTs, and supply chain management.
What ensures data integrity in blockchain?
Data integrity in blockchain is ensured through cryptographic hashing, consensus mechanisms, and decentralization. Hashing secures transaction data, while consensus ensures only valid data is added to the blockchain. Decentralization prevents single points of failure, further strengthening data integrity.
What is a fork in blockchain?
A fork occurs when there is a change in a blockchain’s protocol, causing the chain to split into two separate paths. Forks can be temporary (soft forks) or permanent (hard forks), depending on the nature of the change. Forks may arise due to disagreements among participants or upgrades to the network.
What is a hard fork?
A hard fork is a significant and non-backward-compatible change to a blockchain’s protocol, creating a permanent split in the chain. Participants must upgrade their software to remain part of the new chain. Examples include Bitcoin Cash splitting from Bitcoin and Ethereum’s split into Ethereum and Ethereum Classic.
What is a soft fork?
A soft fork is a backward-compatible update to a blockchain’s protocol, meaning non-upgraded nodes can still participate in the network. Soft forks often introduce new features or optimizations without causing a permanent chain split. They are considered less disruptive than hard forks.
What is double-spending?
Double-spending is a potential issue in digital currencies where the same token is spent more than once. Blockchain prevents this by requiring consensus among nodes to validate transactions. Once a transaction is confirmed, it becomes part of the immutable ledger, making double-spending nearly impossible.
How does blockchain prevent double-spending?
Blockchain prevents double-spending by using a consensus mechanism that ensures only one version of the ledger is valid. Transactions are validated by nodes and recorded in blocks, which are linked securely using cryptographic hashes. This process ensures that each token can be spent only once.
What is block time?
Block time refers to the average time it takes to create and add a new block to the blockchain. It varies depending on the blockchain; for example, Bitcoin’s block time is approximately 10 minutes, while Ethereum’s is around 12 seconds. Block time impacts transaction speed and network throughput.
What is block size?
Block size is the maximum amount of data that can be included in a single block on a blockchain. Larger block sizes allow more transactions per block but may increase the time required for validation and propagation. For example, Bitcoin’s block size is limited to 1 MB, while Bitcoin Cash allows up to 32 MB.
What is scalability in blockchain?
Scalability refers to a blockchain’s ability to handle increasing numbers of transactions as the network grows. It is one of the biggest challenges for blockchain technology, often requiring trade-offs between decentralization and security. Solutions include layer-2 protocols, sharding, and larger block sizes.
What is a transaction fee?
A transaction fee is a payment made by users to incentivize miners or validators to process their transactions. Fees help prioritize transactions during periods of high network activity. In Proof of Stake systems, fees may also be distributed among validators as rewards.
What is on-chain data?
On-chain data refers to any information or transaction that is directly stored and recorded on the blockchain. This includes financial transactions, smart contract executions, and metadata. On-chain data is permanent, transparent, and secured by the blockchain’s cryptographic mechanisms.
What is off-chain data?
Off-chain data refers to information that is stored outside the blockchain but linked to it through references or hashes. This approach is often used to improve scalability and privacy. Examples include IPFS (InterPlanetary File System) and off-chain transactions managed by payment channels.
What is a blockchain explorer?
A blockchain explorer is a web-based tool that allows users to view and search blockchain data. It provides information on transactions, wallet addresses, blocks, and network activity. Examples include Etherscan for Ethereum and Blockchain.com for Bitcoin.
What is a 51% attack?
A 51% attack occurs when a malicious entity gains control of more than 50% of a blockchain’s hashing power or staking power. This control allows them to manipulate the network, such as altering transactions, double-spending, or halting new transactions. Proof of Work blockchains are particularly vulnerable to this type of attack.
What are the main layers of blockchain?
Blockchain consists of three main layers: the application layer, the protocol layer, and the infrastructure layer. The application layer includes DApps and smart contracts, the protocol layer defines consensus rules, and the infrastructure layer provides the hardware and network connectivity.
What is cryptographic security in blockchain?
Cryptographic security ensures that data on the blockchain is protected from tampering or unauthorized access. It relies on techniques like hashing and digital signatures. These methods provide data integrity, authenticity, and secure identity verification.
What is transparency in blockchain?
Transparency in blockchain refers to the ability of participants to view and verify all recorded transactions. Public blockchains, like Bitcoin, allow anyone to access the full ledger, fostering trust. Transparency is a key feature for auditing and accountability in decentralized systems.
