Prepare Yourself With These Top 30 Blockchain Interview Questions 2021 –
Want to have a career in the Blockchain space? This article talks about the top 30 interview questions to get you ready for a big interview. Excited? Let’s get started.
Table of Contents
- Top Interview Questions You Should be Prepared for
- Wrapping Up: How to Learn Blockchain?
Top Interview Questions You Should Know
In this section, let’s discuss the top 30 blockchain questions and answers.
1. What is the difference between Bitcoin Blockchain and Ethereum Blockchain?
Both Bitcoin and Ethereum have decentralized distributed databases of immutable records. But Bitcoin and Ethereum differ in purpose in a way that Bitcoin is considered as an alternative digital currency that offers various advantages, whereas Ethereum is regarded as the king of smart contracts that facilitates Peer-to-Peer contracts and applications via its own currency known as ETH. Ethereum was introduced with an intent to complement rather than compete with bitcoin.
2. How is Blockchain different from traditional databases?
A database is a kind of central ledger, whereas Blockchain has a distributed ledger, which means unlike the traditional databases, it is not governed by any central server. Due to this, Blockchain is a fully confidential and robust technology.
3. What is double-spending, and how can it be stopped?
It is the process of spending a balance of that cryptocurrency more than once. It is done by fooling the network to think that the original amount is never spent, thus making it available to be used for multiple transactions.
However, this problem can be prevented in blockchain-based cryptocurrencies by utilizing a consensus mechanism known as Proof-of-Work (PoW).
Bitcoin’s solution to deal with this crucial problem is that if the majority of the nodes agree on which transaction was first to be received, later tries to double-spend are pointless.
4. Out of the three types of Blockchain, which is the best one?
Out of public, private, and consortium Blockchain, to state which one is the best would not be right because each of has its own features, usage, and requirements. If you want to design and implement your own enterprise blockchain, a private blockchain is a one-stop solution. Consortium blockchain, on the other hand, is likely to interest organizations who want to efficiently streamline communication among one another.
|Accessibility||Anyone||Single Person/ Central Incharge||More than one central in-charge.|
|Who can join?||Anyone||Permissioned and known identities||Permissioned and known identities|
|Consensus Mechanism||PoS/PoW||Voting or multi-party consensus algorithm||Voting or multi-party consensus algorithm|
|Transaction Speed||Slow||Lighter & Faster||Lighter & Faster|
|Decentralization||Completed Decentralized||Less Decentralized||Less Decentralized|
5 How ICO differs from IPO?
ICO stands for Initial Coin Offering, whereas IPO stands for Initial Public Offering. The first difference between an ICO and an IPO is that ICO is generally for the young and risky, whereas IPO is mainly for well-settled companies. The process of issuing also differs in both. An IPO is an extensive process that requires underwriters and lengthy evaluations to determine the market price of each share. Moreover, for an IPO, you need lawyers, banks, and patience, whereas, for ICO, one needs programmers and the Internet.
6 Name a few popular platforms for developing Blockchain-based applications?
There are multiple platforms available but before deciding on one, understand what type of Blockchain do you need, how popular is the chosen platform, what kind of scalability does your solution need, and ensure whether your preferred blockchain platform supports smart contract functionality or not.
Blockchain platforms enable the development of blockchain-based applications that are in great demand and useful for businesses and enterprises. A few of the top platforms for developing Blockchain-based apps are Hyperledger Fabric, Ethereum, R3 Cords, Quorum, and Ripple.
7 What do you know about the lightning network?
It is an off-chain, micropayment system designed to make transaction processing faster in the Blockchain. In Lightning Network, the members can directly interact with each other without offering anything to the miners, and members can engage in numerous microtransactions with each other. And finally, when the payment channel is locked, the concluding transaction set is added to the Blockchain.
Lightning network not only helps in scalability but also makes payments instantaneous, and transactions are not dependent on miners. The network is micropayment and multi-signature friendly and, moreover, reduces the load of the main chain and decreases waiting time.
8 Distinguish between Fungible and Non-Fungible.
- Fungible are Interchangeable: Fungible tokens are interchangeable and can be exchanged with any other token of the equivalent kind.
- Non-Fungible are Non-Interchangeable: Unlike Fungible tokens, such tokens are non-interchangeable as they cannot be replaced with the non-fungible token of the same type.
- Fungible Tokens are Uniform: Each token is different from all other tokens of the same type.
- Non-Fungible Ones are Unique: All tokens of each type are identical in specification, and each token is identical to the other.
- Fungible Tokens are Divisible: These tokens can be divisible into smaller units, and one can get any number of units, and it does not matter to holders as long as the value remains the same.
- Non-Fungible Tokens are Non-Divisible: These tokens cannot be divided in any sense.
9 What is Blockchain Wallet?
A blockchain wallet can be defined as a digital wallet or E-wallet that allows individuals to store, manage, and transfer their cryptocurrencies such as Bitcoin(BTC), Ethereum(ETH), and many more. With such wallets, users can manage their balances of these two cryptocurrencies by paying transaction fees that depend on various factors such as transaction size. Since digital assets or cryptocurrencies are just a number, that is why the wallet keeps the private key of any particular individual, and the private key fetches the balance of that individual from the Blockchain.
10 Explain the features of DeFi.
- Autonomy — DeFi platforms ensure that your assets are all yours, and no one has control over them.
- Enables affordable and faster cross border payments
- Tradability — You can trade more efficiently as they aren’t prone to an entire high-value investment at once.
- Accessibility: DeFi has a financial system that is accessible to everyone regardless of their location.
- Interoperability: DeFi apps and protocols are built to integrate and complement one another.
- Transparency — In the DeFi environment, data is available publicly, which helps keep service providers impartial.
- Question: What are the requirements for implementing Blockchain technology for enterprise usage?
Answer: Here are the most basic ones:
- Is the network peer-to-peer?
- Does the system offer smart contract functionality for the execution of decentralized applications or not?
- Can data be stored permanently without compromising the security measures?
- Does it offer decentralized data storage?
- What are its data privacy aspects?
- Is the immutability ensured?
12 Question: What is blockchain mining?
Answer: Blockchain mining is a process by which transactions of a blockchain are verified without involving any third-party. Every time a transaction is sent from a Bitcoin wallet, it is sent to the transaction pool. Miners then pick hundreds of transactions and combine them to form a block with other overheads like Merkel Root, SHA-256 Hash, Nonce, etc.
13 List some of the top blockchain development tools.
- Meta Mask
- Truffle Framework
14 What, according to you, are the key Challenges for Blockchain Adoption
- Energy Consumption
- Lack of Talent
- Lack of standardization
15 What are the drawbacks of Blockchain?
It is a complex technology that is hard to understand and implement. Scalability is another issue related to Blockchain. Moreover, network speed and transaction costs vary, and human errors still persist.
16 Is it possible in Blockchain to remove one or more blocks from the networks?
No, it is not possible to manually remove a block. However, blocks can be removed with the help of default options and filters. Deleted blocks can be re-downloaded again whenever needed.
17 Enlist key features of Blockchain technology.
Transparency– Transparency is one of the significant issues in the current industry. Although to improve it, organizations have attempted to implement more rules and regulations, but there is one thing that doesn’t make any system completely transparent,i.e., centralization. But with the help of Blockchain, organizations can go for a complete decentralized network where there is no need for a centralized authority, improving the transparency of the system.
Immutability– Blockchain is immutable, meaning nobody can modify the data over a blockchain. This feature enables companies to ensure that there is no hamper of data, making their system more functional in a highly competitive market.
High Availability– As we already defined Blockchain as a decentralized system of peer to peer network, thus it is highly available due to the concept of decentralization. It offers decentralized services that provide unique access to the options that are otherwise unavailable.
Security– Unlike traditional databases, Blockchain provides a high level of security to its users. High security is due to the cryptographic algorithms which are being run behind the Blockchain. Rather than trusting any individual or third party, in the Blockchain, one needs to trust only cryptographic algorithms.
Fast Dealing- Traditional banking organization takes a lot of time in initiating and processing the transactions and is prone to human error and often requires a third-party intermediary. Blockchain can streamline and automate the entire process without any human intervention and with complete accuracy.
Reduced Transaction Fees- As Blockchain removes the involvement of the third party, it eliminates the overhead cost of exchanging the assets; thus, it leads to reduced transaction fees.
18 Mention types of Consensus Algorithms?
- Proof-of-Work (PoW)
- Proof-of-Stake (PoS)
- Delegated Proof-of-Stake (DPoS)
- Proof-of-Authority (PoA)
- Proof-of-Elapsed Time (PoET)
- Byzantine Fault Tolerance
19 Explain how PoW consensus works.
The central principle behind PoW consensus is to solve complex mathematical problems and make the largest number of guesses as quickly as possible. Such requires a lot of computational power, and by using a more efficient mining machine to run calculations, a miner can maximize profitability in terms of crypto rewards.
In this type of consensus mechanism, miners compete to be the first one to find a hash regarding a particular block, which can only be solved using sheer computing power to make the largest number of guesses. When a miner finds the right solution, they advertise it to the whole network, receiving a reward in cryptocurrency provided by the protocol.
20 Explain the Concept of PoS
Proof-of-Stake is a consensus algorithm that deals with the main drawbacks of PoW. In this mechanism, every block gets validated before the network adds another block to the blockchain ledger. Unlike PoW, where miners have to solve complex puzzles, in PoS, miners can join the mining process using their coins to stake. It allows users to mine for rewards using very minimal hardware and software resources. Here, the mining capacity of a particular miner depends on how many coins they already have; thus, the more coins one has, the better chances are, which indicates only the richest can have control of the consensus.
21 Define the term CBDC
CBDC stands for Central Bank Digital Currency, which is controlled directly by the country’s central bank and is backed by national credit and government power.
In other words, CBDC is an electronic form of central bank money that can be used to store value and make digital payments seamlessly.
22 What is DeFi technology? Explain the term, DeFi Pulse
Decentralized Finance can be defined as financial services using smart contracts that don’t need any central authority and uses decentralized, distributed ledger technology, Blockchain. Most of the DeFi protocols are based on the Ethereum Blockchain network.
DeFi Pulse is a data site that lets individuals find the latest analytics and rankings of all DeFi protocols. Pulse rankings track the total value that is locked into the smart contracts of DeFi protocols so that individuals can stay up to date on the latest trends.
23 What is Hyperledger Fabric?
Hyperledger Fabric is a distributed ledger platform that comes with versatility, modularity, and performance specially crafted to provide enterprise-grade solutions. It is an open-source enterprise-grade permissioned DLT platform known to provide modularity and versatility for a broad set of industry use cases, including banking, insurance, healthcare, supply chain, human resources, etc.
24 What are Smart Contracts? What are its benefits?
A smart contract is used to describe computer code that can facilitate the exchange of money, content, shares, or anything of value. When running on the Blockchain, smart contracts becomes like a self-operating computer program that executes automatically when desired conditions are met. Since such contracts run on the Blockchain, they run exactly as programmed, without any possibility of censorship, downtime, fraud, or any third-party interference.
- No intermediaries ensure a quick transaction process
- Secure and Efficient
- No Middleman, more savings
- Works with accuracy and precision
- Establish confidence
- Automation saves time and effort.
25 What are dApps? Mention some of the popular dApps.
Decentralized applications (dApps) are digital applications that exist and run on a peer to peer network of computers instead of a single computer.
Some of the dApps that are popular, innovative, and feature-rich are:
- EOS Dynasty
26 Explain the role of Blockchain in Governance
Due to increased decentralization, data integrity, and transparency, along with better efficiency and reduced operational costs, blockchains are becoming popular in governance. From improving transparency to streamlining the tax collection mechanism, Blockchain distributed networks can help governments to operate more efficiently and build higher levels of trust among their citizens.
27 Mention some of the myths related to Blockchain.
- Blockchain and Cryptocurrencies are the same.
- All blockchains are public blockchains.
- Technology only targets the finance domain.
- Blockchain is just a database.
- Blockchain is free and highly accessible.
28 Are there any restrictions for putting records in Blockchain?
No, there is no such restriction. One can store any kind of record, depending upon their requirements. The most common type of records that are recorded in Blockchain are records of transaction processing, identity management, business transactions, health management data, and all other crucial documentation.
29 Is Blockchain a trusted approach?
Blockchain is undoubtedly a trustable technology that helps participating parties to share their valuable data in a secure and tamper-proof manner. It makes use of cryptography for securing crucial information, thus making it extremely hard for attackers to play with stored data. Due to its high potential to provide security, it is widely adopted and implemented by various organizations and businesses for their operations.
30 What do you know about the future of Blockchain?
Blockchain is likely to discover a whole new way of economic transactions and contribute to global economic development immensely. Although its mainstream adoption is yet to be achieved, once it is done, it will change the way businesses operate and transform the landscape of the technology sector forever.
Wrapping Up: How to Learn Blockchain?
We hope all the questions mentioned above will help you get ready for your interview.
If you are a beginner and want to get started with Blockchain, Blockchain Council can assist you. Whether you want to become a Blockchain Developer or an Expert, or an Architect, Blockchain Council can be your one-stop solution. Blockchain Council is a globally renowned organization with an authoritative group of subject experts and enthusiasts who are evangelizing Blockchain research and development, use cases and products and knowledge for a better world.
All Blockchain certifications offered by Blockchain Council are meant for a duration of roughly 6-8 hours and to be completed as self-paced training.
Getting certified will help you gain an in-depth understanding of Blockchain & its implementation and prove your Blockchain skills & understanding.