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Blockchain
Blockchain is a decentralized, distributed ledger technology that enables secure and transparent record-keeping of transactions across a network of computers. It was originally developed as the underlying technology for the cryptocurrency Bitcoin, but its potential applications have expanded far beyond digital currencies. Overall, blockchain technology has the potential to revolutionize various aspects of business and society by providing secure, transparent, and efficient systems for recording and verifying transactions and data.
Edited at 2022-08-23 15:38:52
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BC
Background Theories
1. What is Blockchain?
constantly growing ledger(file)
can be used
Backbone of Bitcoin
Peer to Peer Electronic cash system
2. What are the different types of Blockchains?
1.Public Blockchain
2. Private Blockchain
3. Consortium Blockchain
3. List the key features of Blockchain.
Immutability
Immutability means something that can't be changed or altered.
This is one of the top Blockchain features that help to ensure that the technology will remain as it is - a permanent, unalterable network.
Every node on the system has a copy of the digital ledger.
To add a transaction every node needs to check its validity.
If the majority thinks it's valid, then it's added to the ledger.
This promotes transparency and makes it corruption-proof.
So, without the consent from the majority of nodes, no one can add any transaction blocks to the ledger.
Decentralized
The network is decentralized meaning it doesn't have any governing authority or a single person looking after the framework.
Rather a group of nodes maintains the network making it decentralized.
As the system doesn't require any governing authority, we can directly access it from the web and store our assets there.
Distributed Ledgers
Usually, a public ledger will provide every information about a transaction and the participan in the open, nowhere to hide.
Although the case for private or federated Blockchain is a bit different. But still, in those cases, many people can see what really goes on in the ledger.
That's because the ledger on the network is maintained by all other users on the system.
This distributed computational power across the computers to ensure a better outcome.
This is the reason it's considered one of the Blockchain essential features.
The result will always be a higher efficient ledger system that can take on the traditional ones.
Enhanced Security
Added with decentralization, cryptography another layer of protection for users.
Cryptography is a rather complex mathematical algorithm that acts as a firewall for attacks.
Every information on the Blockchain is hashed cryptographically
In simple terms, the information on the network hides the true nature of the data.
For this process, any input data gets through a mathematical algorithm that produces a different kind of value, but the length is always fixed.
Consensus
In simple terms, the consensus is a decision-making process for the group of nodes active on the network.
Here, the nodes can come to an agreement quickly and relatively faster.
When millions of nodes are validating a transaction, a consensus is absolutely necessary for a system to run smoothly.
You could think of it as kind of a voting system, where the
majority wins, and the minority has to support it
Faster Settlement
Traditional banking systems are quite slow. Sometimes it can take days to process a transaction after finalizing all settlements.
It also can be corrupted quite easily. Blockchain offers a faster settlement compared to traditional banking systems.
This way a user can transfer money relatively faster , which saves a lot of time in the long run.
4. How does Blockchain differ from relational databases?

5. Name some popular platforms for developing Blockchain applications.
Ethereum
Hyperledger Sawtooth
Quorum
Ripple
R3 Corda
Qtum
IOTA
EOS
6. What do you mean by blocks in the Blockchain technology?
[ ] A Blockchain consists of a list of records (some or all of the recent transaction).
[ ] Such records are stored in blocks.
[ ] Each time a block gets completed, a new block is generated.
[ ] The block linked with other blocks constitutes a chain of blocks called Blockchain.
[ ] Each block, after added into the Blockchain, will be stored as a permanent database.
[ ] We cannot delete or reverse any block from the Blockchain.
7. Every block of Blockchain consist of what elements?
Every block must include these three things:
List of transactions
A hash pointer to the previous block
Timestamp
8. Can you modify the data in a block?
No, it's not possible to modify the data in a block.
In case any modification is required, you would have to erase the information from all other associated blocks too.
9. What type of records can be kept in the Blockchain? Is there any restriction on the same?
No, it is not possible to give restriction for keeping records in the Blockchain approach.
We can put any type of data on a Blockchain.
Some of the common types of records which can be kept in the Blockchain are:
Records of medical transactions
Transaction processing
Identity management
Management activities
Events related to organizations
Documentation
10. Which cryptographic algorithm is used in Blockchain?
Blockchain uses SHA-256 Hashing algorithm.
11. What are the Merkle trees? What is its importance in Blockchain?

Merkle tree is a fundamental part of Blockchain technology.
It is a mathematical data structure composed of hashes of different blocks of data, and which serves as a summary of all the transactions in a block.
It also allows for efficient and secure verification of content in a large body of data.
It also helps to verify the consistency and content of the data.
Both Bitcoin and Ethereum use Merkle Trees structure. Merkle Tree is also known as Hash Tree.
The Merkle tree plays a vital role in Blockchain technology. If someone needs to verify the existence of a specific transaction in a block, then there is no need to download the entire block to verify the transaction in a block.
He can only download the chain of block headers. It allows downloading a collection of a branch of the tree which contains this transaction is enough.
We check the hashes which are relevant to your transactions. If these hashes check out is correct, then we know that this particular transaction exists in this block.
https://youtu.be/fB41w3JcR7U
12. What is Double Spending?
13. Centralized Vs. Decentralized Vs. Distributed
14. What is a hash function?
15. What are the features of a hash function?
16. What is a digital signature?
17. Actors Involved in Blockchain Solution
Bitcoin
1. What Is Bitcoin?
2. How to Mine Bitcoin?
A variety of hardware and software can be used to mine Bitcoin.
When Bitcoin was first released, it was possible to mine it
**competitively on a personal computer.**
However, as it became more popular, more miners joined the network, which lowered the chances of being the one to solve the hash.
You can still use your personal computer as a miner if it has newer hardware, but the chances of solving a hash are individually being minuscule.
This is because you're competing with a network of miners that generate around 220 quintillion hashes (220 exa hashes) per second.
Machines, called Application Specific Integrated Circuits (ASICs), have been built specifically for mining—can generate around 255 trillion hashes per second.
In contrast, a computer with the latest hardware hashes around 100 mega hashes per second (100 million).
To successfully become a Bitcoin miner, you have several options. You can use your existing personal computer to use mining software compatible with Bitcoin and join a mining pool.
Mining pools are groups of miners that combine their computational power to compete with the large ASIC mining farms.
3. How Do You Buy Bitcoin?
4. How Long Does It Take to Mine 1 Bitcoin?
5. What Is a Nonce?
A nonce is a random value in the block header. It is needed to generate new hashes from a given data set.
For example: Your data you want to hash is “Hello”. Each time you hash your data “Hello” the hash will be the same. So adding a random value to generate other hashes is needed. The nonce itself is meaningless.
The reason this exists, is to generate matching hashes for the Proof-of-Work mining, where you need specific values at the start of the hash (For example “000[…]”.
The following Screenshot is taken from the CrypTool 2 software and shows the block header and nonce value, which in this case was incremented by 1 every time the hash value was not matching the number of zeroes at the beginning of the required hash (In this case 4 zeroes).
5978 hashes were calculated before a matching hash with 4 zeroes was found.
"Nonce" is a portmanteau of "number used only once."
It is a number added to a hashed—or encrypted—block in a Blockchain that, when rehashed, meets the difficulty level restrictions.
The nonce is the number that Blockchain miners are solving for.
When the solution is found, the Blockchain miner that solves it is given the block reward.
6. What is Double-Spending?
Double-spending is a potential flaw in a digital cash scheme in which the same single digital token can be spent more than once.
Unlike physical cash, a digital token consists of a digital file that can be duplicated or falsified.
As with counterfeit money, such double-spending leads to inflation by creating a new amount of copied currency that did not previously exist.
This devalues the currency relative to other monetary units or goods and diminishes user trust as well as the circulation and retention of the currency.
Fundamental cryptographic techniques to prevent double-spending, while preserving anonymity in a transaction, are blind signatures and, particularly in offline systems, secret splitting.
7. How anonymous is Bitcoin?
Cryptocurrency, and Bitcoin especially, has a reputation for being a completely anonymous form of payment, free from tracking and interference.
However, if you look a little closer, you'll see that these digital currencies reveal a lot more information about you than you might think.
The main issue with Bitcoin is with its wallet, where your Bitcoin is stored.
Cryptocurrency wallets are generally written under a false name rather than anonymous.
Anonymity is about being "nameless"—it comes from the Greek word for "without name"—but instead, your wallet gives you a fake name, a pseudonym. Instead of "Mark Twain," you get some scrambled numbers and letters, but the idea is the same.
Despite the Bitcoin Project itself disclosing this information on its website, plenty of people have taken the scrambled nature of their wallet addresses to mean that payments can't be tracked.
That's the point behind using a fake name, after all. But your Bitcoin wallet address can be tracked, and rather simply, too: It's right there in the way that the system is set up.
8. Are cryptocurrency transactions actually anonymous?
Since the original 2008 white paper introducing Blockchain technology, bitcoin and other cryptocurrency transactions have been touted as completely anonymous and private. But how anonymous are crypto transactions really?
Because cryptocurrency allows for direct peer-to-peer transactions made via the internet, the idea is that only two parties are involved in the activity.
No banks, governments or intermediaries are necessary. Although this appears to set up the perfect framework for privacy and anonymity, this year's bust and other examples paint a different picture of crypto transactions.
9. Are bitcoin transactions anonymous?
No.
Bitcoin transactions can be traced, as demonstrated by the recent bust in Manhattan as well as last year's Colonial Pipeline hack, in which authorities were able to recoup some of the ransom payment from the attackers.
10. What are the features of bitcoin script?
Script is a Forth-like, stack-based, reverse-polish, Turing incomplete programming language.
Stack-based:
Bitcoin Script uses a data structure that can be thought of as a linear structure represented by a physical stack or pile.
Items at the top of the stack can be added (pushed) or removed (popped) in a "Last In, First Out (LIFO)" queue.
Forth-Like:
Script resembles Forth, a programming language that first appeared in 1970.
Forth is used in the Open Firmware Bootloader, space applications (including the Philae spacecraft), and a variety of other embedded systems involving interactions with hardware.
Reverse-Polish Notation (RPN):
Also known as postfix notation, RPN is a method of placing the operation function at the end of a sentence.
For example, adding 5 and 6 in Script must be written as "5 6 +" rather than "5 + 6."
Turing Incomplete:
It means that Script for Bitcoin and other cryptocurrencies does not allow
infinite loops. This has both advantages and disadvantages.
One advantage of using a Turing incomplete language is the inability to run malformed scripts, regardless if they are intentional malicious attacks or unintentional programming errors. Essentially, Script is able to prevent the halting problem.
Other Blockchains developed since Bitcoin have mainly chosen to be Turing Complete, or at least have a high degree of Turing completeness.
Although this potentially brings the halting problem into play, it also provides better support for the complex logic required for developing smart contracts.
11. Locking and Unlocking Script
Introduction to Blockchain
1. What is a ledger?
A ledger in accounting refers to
a book that contains different accounts where records of transactions pertaining to a specific account is stored
It is also known as the book of final entry or principal book of accounts.
It is a book where all transactions either debited or credited are stored.
2. What is a centralized ledger?
A centralised ledger system is **a collection of all transactions which is controlled by a single entity** i.e. it has a single point of control.
3. What is a distributed ledger?

A distributed ledger is a database that is
agreeably shared and synchronized across multiple sites , institutions, or geographies, accessible by multiple people.
It allows transactions to have
public "witnesses."
The participant at each node of the network can access the recordings shared across that network and can own an identical copy of it.
Any changes or additions made to the ledger are reflected and copied to all participants in a matter of seconds or minutes.
4. What is a block?

[ ] Blocks are data structures within the blockchain database, where
transaction data in a cryptocurrency blockchain are permanently recorded.
[ ] A block records some or all of the most recent transactions not yet validated by the network.
Once the data are validated, the block is closed.
[ ] Then, a
new block is created for new transactions to be entered into and validated.
5. What is a chain?
Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain.
6. How blocks are chained?
Blocks are records linked together by
cryptography in a blockchain.
In addition to a cryptographic hash of the
previous block and the timestamp , each block contains transaction data.
This chain of blocks is what is referred to as a
truly distributed ledger , as it is made up of the blocks created by various miners
7. How tempering in any block is detected?
8. What are Blockchains?
They are immutable digital ledger systems implemented in a distributed fashion (i.e. without a central repository) and usually without a central authority.
9. What is a typical block structure in bitcoin?
For bitcoin, a typical block structure contains:
Number of average transaction: >500
Average Size 1 MB (May grow upto 8MB+)
(Larger the block size, more the transactions which can be accommodated and processed at a time)
10. What is distributed consensus?
The distributed consensus problem deals with reaching agreement among a group of processes connected by an unreliable communications network.
11. What is permissioned model?
Only a restricted set of users have the rights to validate the block transactions. (aka private)
Decentralization
Transparency
Governance
Tokens
Scalability and Performance
Privacy
Algorithms
Synchronous N/w
RAFT
Paxos
BFT (Byzantine Fault Tolerance)
Asynchronous N/w
PBFT (Practical BFT)
DBFT (Delegated BFT)
FBFT (Federated BFT)
12. What is permission-less model?
Anyone can join the network, participate in the process of block verification to create consensus and also create smart contracts. (aka public)
Decentralization
Transparency
Governance
Tokens
Scalability and Performance
Anonymity
Algorithms
Proof of Work (PoW) (E.g. Bitcoin)
Proof of Stake (PoS) (E.g. Ethereum)
Proof of Activity (PoA)
Proof-of-Location (PoL)
Proof-of-Importance (PoI)
Proof-of-Elapsed-Time (PoET)
Consensus
1 What is the consensus on Blockchain?
Consensus for Blockchain is a procedure in which the peers of a Blockchain network reach an agreement about the present state of the data in the network.
Through this, consensus algorithms establish reliability and trust in the Blockchain network.
2 Why do Blockchains need consensus mechanisms?
Consensus mechanisms form the backbone of all cryptocurrency Blockchains and are what makes them secure.
In order to guarantee that all participants (‘nodes’) in a Blockchain network agree on a single version of history ,
Blockchain networks like Bitcoin and Ethereum implement what’s known as consensus mechanisms (also known as consensus protocols or consensus algorithms).
These mechanisms aim to make the system fault-tolerant.
3 What are consensus mechanisms?
1.Consensus is the **process** by which a **group of peers or nodes** – on a network determine which Blockchain transactions are valid and which are not.
2.Consensus mechanisms are the **methodologies** used to achieve this agreement.
3.It’s these **sets of rules** that help to protect networks from **malicious behavior and hacking attacks.**
4.There are many different types of consensus mechanisms, depending on the Blockchain and its application.
5.While they differ in their **energy usage, security, and scalability**, they all share one purpose: to ensure that records are **true and honest.**
4 Explain Proof of Work (PoW)
Used by Bitcoin, Ethereum, and many other public Blockchains, proof of work (PoW) was the **very first consensus mechanism** created.
It is generally regarded to be the **most reliable and secure** of all the consensus mechanisms, though concerns over scalability are rife.
In PoW, miners essentially compete against one another to solve **extremely complex computational puzzles** using high-powered computers.
The first to come up with the **64-digit hexadecimal number** (‘hash’) earns the right to form the **new block** and **confirm the transactions.**
The successful miner is also rewarded with a **predetermined amount of crypto**, known as a ‘block reward’.
As it requires large amounts of **computational resources** and **energy** in order to generate new blocks, the operating costs behind PoW are notoriously high.
This acts as a barrier of entry for new miners, leading to concerns about **centralization and scalability limitations**. And it’s not just the costs that are high.
The most common criticism of PoW is the impact **electrical consumption** has on the environment. (This has led many to seek more sustainable, energy-efficient consensus protocols, such as proof of stake (PoS).)
5 Explain Proof of Stake (PoS)
1. As the name suggests, this popular method of consensus revolves around a process known as staking.
2. In a proof of stake (PoS) system, miners are required to **pledge** a ‘stake’ of digital currency for a chance to be randomly chosen as a validator.
3. The process is not unlike a lottery whereby the more coins you stake, the better your odds.
4. Unlike in PoW where miners are incentivized by block rewards (newly generated coins), those who contribute to the PoS system simply **earn a transaction fee.**
5. PoS is seen as a more sustainable and environmentally-friendly alternative to PoW, and one that’s more secure against **51% attack.**
6. However, as the system favors entities with a higher number of tokens, PoS has drawn criticism for its potential to lead to centralization.
7. Prominent PoS platforms include Cardano (ADA), Solana (SOL), and Tezos (XTC).
6 Explain Proof of Burn (PoB)
7 Explain Proof of Elapsed Time (PoET)
8 Explain DDOS attack in Blockchain
9 Explain Sybil attack in Blockchain
10 Explain Double Spending / 51% attack in Blockchain
Mining
1. What Does Mining Mean?
Process of adding transactions to the large distributed public ledger
Mining, in the context of Blockchain technology, is the process of adding transactions to the large distributed public ledger of existing transactions, known as the Blockchain.
New bitcoins are entered
Bitcoin mining is the process by which new bitcoins are entered into circulation.
Rewards people
Bitcoin mining rewards people who run mining operations with more bitcoins.
2. How does mining work?
verify and record every new bitcoin transaction
Specialized computers perform the calculations required to verify and record every new bitcoin transaction and ensure that the Blockchain is secure.
Verifying the Blockchain requires a vast amount of computing power, which is voluntarily contributed by miners.
Bitcoin mining is a lot like running a big data center.
Companies purchase the mining hardware and pay for the electricity required to keep it running (and cool).
For this to be profitable, the value of the earned coins has to be higher than the cost to mine those coins.
What motivates miners?
The network holds a lottery.
Every computer on the network races to be the first to guess a 64-digit hexadecimal number known as a “hash.”
The faster a computer can spit out guesses, the more likely the miner is to earn the reward.
The winner updates the Blockchain ledger with all the newly verified transactions – thereby adding a newly verified “block” containing all of those transactions to the chain – and is granted a predetermined amount of newly minted bitcoin. (On average, this happens every ten minutes.)
As of late 2020, the reward was 6.25 bitcoin – but it will be reduced by half in 2024 and every four years after.
In fact, as the difficulty of mining increases, the reward will keep decreasing until there is no more bitcoin left to be mined.
There will only ever be 21 million bitcoins.
The final block should theoretically be mined in 2140. From that point forward, miners will no longer rely on newly issued bitcoin as a reward but instead will rely on the fees they charge for making transactions.
3. Why is mining important?
Beyond releasing new coins into circulation, mining is central to Bitcoin’s (and many other cryptocurrencies’) security.
It verifies and secures the Blockchain , which allows cryptocurrencies to function as a peer-to-peer decentralized network without any need for oversight from a third party.
And it creates the incentive for miners to contribute their computing power to the network.
4. What is mining difficulty?
Mining difficulty refers to the difficulty of solving the math puzzle and generating bitcoin.
Mining difficulty influences the rate at which bitcoins are generated.
Mining difficulty changes every 2,016 blocks or approximately every two weeks.
The succeeding difficulty level depends on how efficient miners were in the preceding cycle.
It is also affected by the number of new miners that have joined Bitcoin's network because it increases the hash rate or the amount of computing power deployed to mine the cryptocurrency.
If computational power is taken off the network, the difficulty adjusts downward to make mining easier.
The difficulty level for mining in March 2022 was 27.55 trillion.
That is, the chances of a computer producing a hash below the target are 1 in 27.55 trillion.
5. What is the concept of a Mining pool?
A mining pool is the pooling of resources by miners, who share their processing power over a network, to split the reward equally, according to the amount of work they contributed to the probability of finding a block.
A "share" is awarded to members of the mining pool who present valid partial proof of work.
Mining in pools began when the difficulty of mining increased to the point where it could take centuries for slower miners to generate a block.
The solution to this problem was for miners to pool their resources so they could generate blocks more quickly and therefore receive a portion of the block reward on a consistent basis, rather than randomly once every few years.