With the popularity of Blockchain increasing every day and new jobs opening up in the area, it is important to know how you can prepare for Blockchain interviews to land your dream job. This article (and the attached video) will take you through some of the key questions and their answers that you should be prepared for. Let’s take a look.
Blockchain Interview Questions - Beginner Level
1. Differentiate between Blockchain and Hyperledger.
Blockchain is a decentralized technology of immutable records called blocks, which are secured using cryptography. Hyperledger is a platform or an organization that allows people to build private Blockchain.
Using Blockchain you can build public and private Blockchain whereas with Hyperledger you can only build private Blockchains.
Blockchain is divided into public, private, and consortium Blockchains and Hyperledger is a private Blockchain technology with access to Blockchain data and is limited to predefined users, configurations, and programming.
Blockchain can be used in multiple fields such as business, government, healthcare, etc. while Hyperledger is primarily used for enterprise-based solutions. Wherever we talk about public Blockchain, it refers to the usage of Blockchain on the internet, and Hyperledger-based Blockchain solutions are solutions meant for usage on the intranet, within an organization.
2. How do you explain Blockchain technology to someone who doesn't know it?
Blockchain technology is a distributed ledger, which stores transaction details in the form of immutable records or non-modifiable records (called blocks) which are secured using cryptography.
Let’s consider the example of a school where Blockchain is similar to a digital report card of a student. Say, each block contains a student record that has a label (stating the date and time) of when the record was entered. Neither the teacher nor the student will be able to modify the details of that block or the record of report cards. Also, the teacher owns a private key that allows him/her to make new records and the student owns a public key that allows him to view and access the report card at any time. So basically, the teacher owns the right to update the record while the student only has the right to view the record. This method makes the data secure.
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3. What is Merkel Tree?
Merkel Tree is a data structure that is used for verifying a block. It is in the form of a binary tree containing cryptographic hashes of each block. A Merkle tree is structured similarly to a binary tree where each leaf node is a hash of a block of transactional data and each non-leaf node is a hash of its leaf node. The Merkel root or hash root is the final hash root of all the transaction hashes. It encompasses all the transactions that are underlying all the non-leaf nodes.
4. What do you mean by blocks in Blockchain technology?
Blockchain is a distributed database of immutable records called blocks, which are secured using cryptography. Refer to the video to see the various attributes of a block.
There are a previous hash, transaction details, nonce, and target hash value. A block is like a record of the transaction. Each time a block is verified, it gets recorded in chronological order in the main Blockchain. Once the data is recorded, it cannot be modified.
5. How is Blockchain distributed ledger different from a traditional ledger?
A Blockchain distributed ledger is highly transparent as compared to a traditional ledger.
Blockchain distributed ledgers are irreversible. Information registered on a distributed ledger cannot be modified whereas on a traditional ledger it is reversible.
A distributed ledger is more secure. It uses cryptography and every transaction is hashed and recorded whereas in traditional ledger security can be compromised.
In a distributed ledger, there is no central authority. It is a distributed system and the participants hold the authority to maintain the sanity of the network and are responsible for validating the transactions. Traditional ledgers are based on the concept of centralized control, which controls all transactions.
In a distributed ledger, identities are unknown and hidden whereas in traditional ledger identities of all participants have to be known before the transactions happen.
In a distributed ledger, there is no single point of failure as the data is distributed and information is shared across multiple nodes. If one node fails, the other nodes carry the same copy of the information. In comparison, traditional ledgers have a single point of failure. If a single system crashes, the entire network comes to a standstill.
In a distributed ledger, data modification or change cannot be done but for a traditional ledger, it is possible.
In a distributed ledger, validation is done by the participants in the network while in a traditional ledger, validation is done by a centralized authority.
The copy of the ledger is shared amongst participants in a distributed ledger while in a traditional ledger, a single copy is maintained in a centralized location. It is not shared amongst the participants.
6. How can you identify a block?
Every block consists of four fields -
The hash value of the previous block (thereby getting linked in a blockchain)
It contains details of several transaction data
It has a value called the nonce. The nonce is a random value which is used to vary the value of the hash in order to generate hash value less than the target
Hash of the block itself. It is the digital signature of the block and an alphanumeric value used to identify a block
The hash address is the unique identification of the block. It is a hex value of 64 characters that have both letters and digits. It is obtained by using the SHA - 256 algorithms.
Refer to the video to see how a block is structured. The hash of the previous block, transaction data, and the nonce consolidate the header of the block. They are together passed through a hashing function and then the hash value is generated.
7. What is cryptography? What is its role in Blockchain?
Blockchain uses cryptography to secure users’ identities and ensure transactions are done safely with a hash function.
Cryptography uses public and private keys in order to encrypt and decrypt data. In the Blockchain network, a public key can be shared with all the Bitcoin users but a private key (just like a password) is kept secret with the users.
Blockchain uses SHA - 256 which is secure and provides a unique hash output for every input. The basic feature of this algorithm is whatever input you pass, it will give you a standard alphanumeric output of 64 characters. It is a one-way function from which you can derive an encrypted value from the input, but not vice-versa.
8. What are the different types of Blockchain?
There are three different types of Blockchain - Public, Private, and Consortium Blockchain.
Public Blockchain ledgers are visible to all the users on the internet and any user can verify and add a block of transactions to the Blockchain. Examples, Bitcoin, and Ethereum.
Private Blockchain ledgers are visible to users on the internet but only specific users in the organization can verify and add transactions. It’s a permissioned blockchain, although the information is available publicly, the controllers of the information are within the organization and are predetermined. Example, Blockstack.
In Consortium Blockchain, the consensus process is controlled by only specific nodes. However, ledgers are visible to all participants in the consortium Blockchain. Example, Ripple.
9. What happens when you try to deploy a file with multiple contracts?
In Blockchain, deploying a file with multiple contracts is not possible. The compiler only deploys the last contract from the uploaded file and the remaining contracts are neglected.
10. What is a Genesis Block?
The genesis block is the first block in the Blockchain which is also known as block 0
In Blockchain, it is the only block that doesn’t refer to its previous block.
It defines the parameters of the Blockchain such as,
level of difficulty,
consensus mechanism etc. to mine blocks
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Blockchain Interview Questions - Intermediate Level
11. How is the hash (Block signature) generated?
The process of generating a block signature involves:
Passing transaction details through a one-way hash function i.e., SHA-256.
Running the output value through a signature algorithm (like ECDSA) with the user’s private key.
Following these steps, the encrypted hash, along with other information (such as the hashing algorithm), is called the digital signature.
12. List down some of the extensively used cryptographic algorithms.
Here are a few popular algorithms:
SHA - 256
RSA (Rivest-Shamir-Adleman)
Triple DES
Ethash
Blowfish
13. What is a smart contract and list some of its applications?
Smart contracts are self-executing contracts which contain the terms and conditions of an agreement between the peers
Some of the applications are:
Transportations: Shipment of goods can be easily tracked using smart contracts
Protecting copyrighted content: Smart contracts can protect ownership rights such as music or books
Insurance: Smart contracts can identify false claims and prevent forgeries
Employment contract: Smart contracts can be helpful to facilitate wage payments
14. What is the Ethereum network and how many Ethereum networks are you familiar with?
Ethereum is a blockchain-based distributed computing platform featuring smart contract functionality that enables users to create and deploy their decentralized applications
There are three types of networks in Ethereum:
Live network (main network) - Smart contracts are deployed on the main network
Test network (like Ropsten, Kovan, Rinkeby) - Allow users to run their smart contracts with no fees before deploying it on the main network
Private network - Are those which are not connected to the main network. They run within the premises of the organization but carry the features of an Ethereum network.
15. Where do nodes run a smart contract code?
Nodes run smart contracts code on Ethereum Virtual Machine (EVM). It is a virtual machine designed to operate as a runtime environment for Ethereum-based smart contracts.
EVM is operated in a sandboxed environment (isolated from the main network). This is a perfect testing environment.
You can download the EVM, run your smart contract locally in an isolated manner and once you have tested and verified it, you can deploy it on the main network.
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16. What is a Dapp and how is it different from a normal application?
Dapp:
A Dapp is a decentralized application which is deployed using smart contract
A Dapp has its back-end code (smart contract) which runs on a decentralized peer-to-peer network
Process:
Front-end
Smart contract (backend code)
Blockchain (P2P contract)
Normal application:
Normal application has a back-end code which runs on a centralized server
It’s a computer software application that is hosted on a central server
Process:
Front-end
API
Database (runs on the server)
17. Name some leading open source platforms for developing Blockchain applications.
Ethereum is one of the popular platforms for building Blockchain-based applications
Eris is used for building enterprise-based solutions
Some of the other widely used platforms for building Blockchain include Hyperledger, Multichain, Open chain.
18. What is the very first thing you must specify in a Solidity file?
It is necessary to specify the version number of Solidity at the beginning of code as it eliminates incompatibility errors that can arise while compiling with another version. This is a mandatory clause that has to be there at the top of any Solidity code you write. You also need to mention the correct version number for the code.
19. What is the difference between Bitcoin and Ethereum?
Criteria
Bitcoin
Ethereum
Concept
P2P currency
P2P currency and smart contract
Consensus mechanism
Proof of work
Proof of work/ Proof of stake
Hashing Algorithm
SHA-256
Ethash
Time is taken to mine a block
10 Minutes (approx.)
12-15 seconds
Reward
12.5 BTC
3 ETH
Transaction fee
Optional
A fee is calculated in gas
Value (8/21/18)
1 BTC = 6934.34 USD
1 ETH = 278.98 USD
20. What is the nonce and how is it used in mining?
In Blockchain, mining is a process to validate transactions by solving a difficult mathematical puzzle called proof of work. Now, proof of work is the process to determine a number (nonce) along with a cryptographic hash algorithm to produce a hash value lower than a predefined target. The nonce is a random value that is used to vary the value of hash so that the final hash value meets the hash conditions.
Blockchain Interview Questions - Expert Level
21. Name the steps that are involved in the Blockchain project implementation.
Requirement identification:
Identify the problem and goal
Identify the most suitable consensus mechanism
Identify the most suitable platform
Account for implementation and deployment costs
Planning stage
In this stage and individual evaluates all requirements and decides a suitable blockchain platform to be implemented.
Development and implementation of a project
Designing the architecture
Designing the user interface
Building the APIs
Controlling and monitoring the project
Applying Proof of Concept (POC)
Identifying and fixing issues
22. Explain a real-life use-case where Blockchain is being used.
In supply chain management, smart contracts provide permanent transparency and validation of transactions shared by multiple supply chain partners. Check out our diagrammatic display of supply chain management using Blockchain in our video.
23. List and explain the parts of EVM memory.
The memory of an EVM is divided into three types:
Storage:
Storage values are stored permanently on the Blockchain network
It is extremely expensive
Memory:
Memory is a temporary modifiable storage
It can be accessed only during contract execution. Once the execution is finished, its data is lost
Stack:
A stack is temporary and non-modifiable storage.
Here, when the execution completes, the content is lost.
24. What happens if the execution of a smart contract costs more than the specified gas?
Initially, your transaction will be executed, but if the execution of a smart contract costs more than the specified gas, then the miners will stop validating your contract. The Blockchain will record the transaction as failed, also the user doesn’t get a refund.
25. What does the gas usage in a transaction depend on and how is the transaction fee calculated?
Gas usage depends upon the amount of storage and set of instructions (codes) used in a smart contract. The transaction fee is calculated in Ether, which is given as:
Ether = Tx Fees = Gas Limit * Gas Price
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26. What is the fork? What are some of the types of forking?
In simple terms, updating a cryptocurrency protocol or code is called forking. Fork implies that a Blockchain splits into two branches. It can happen when the participants of the network cannot come to an agreement with regards to the consensus algorithm and new rules to validate transactions.
There are three types of forking:
Hard forks
Soft forks
Accidental forks
27. Differentiate between Proof of Work vs Proof of Stake.
Proof of Work (PoW):
In Blockchain, PoW is the process of solving a complex mathematical puzzle called mining. Here, the probability of mining a block is based upon the amount of computational work done by a miner. Miners spend a lot of computing power (with hardware) for solving the cryptographic puzzle.
Proof of Stake (PoS):
PoS is an alternative to PoW in which the Blockchain aims to achieve distributed consensus. The probability of validating a block relies upon the number of tokens you own. The more tokens you have, the more chances you get to validate a block. It was created as a solution to minimize the use of expensive resources spent in mining.
28. What is a 51% attack?
In Blockchain, a 51% attack refers to a vulnerability where an individual or group of people controls the majority of the mining power (hash rate). This allows attackers to prevent new transactions from being confirmed. Further, they can double-spend the coins. In a 51% attack, smaller cryptocurrencies are being attacked.
29. What are function modifiers in Solidity? Mention the most widely used modifiers.
In Solidity, function modifiers are used to easily modify the behavior of your smart contract functions. In simple terms, it can build additional features or apply restrictions on the function of smart contracts. The most extensively used function modifiers in solidity are:
View, which are functions that cannot modify the state of a smart contract. They are read-only functions. Refer to our video to see an example of a View function
Pure, which are functions that neither read nor write the state of a smart contract. They return the same result determined by its input values. Refer to our video to see an example of a Pure function
30. Write a crowd-sale smart contract code in Solidity programming language.
Refer to our video to know how to write a Crowd function.
Enroll in our Blockchain Developer Certification course and learn to work with Ethereum deployment tools and bitcoin transaction process.
Conclusion
With these blockchain interview questions and answers, we hope you will be able to sail through your blockchain interview with confidence. However, if you want to dive deep check out our tutorial on blockchain and our Blockchain Certification Training Course that will help you achieve thorough expertise in the technology.
The incentive to save exists but the existence of savings necessarily requires producing something of value demanded by others. If at first you don’t succeed, try, try again. The interests and incentives align perfectly between those that have the currency and those providing goods and services, particularly because the script is flipped on the other side of each exchange. Paradoxically, everyone would be incentivized to 'save more' in a world in which more money technically could not be saved. Over time, each person would hold less and less of the currency in nominal terms on average but with each nominal unit purchasing more and more over time (rather than less). The ability to defer consumption or investment and be rewarded (or rather simply not be penalized) is the lynchpin that aligns all economic incentives.In this stage and individual evaluates all requirements and decides a suitable blockchain platform to be implemented.