Blockchain has captured our attention. It is undoubtedly growing at a rapid pace with multiple startups and organizations working tirelessly to make blockchain improve. The technology is groundbreaking and is changing every sector out there. Even investors are interested in exploring the scopes of blockchain and are investing in startups or organizations that are using blockchain to solve problems.
So, what does that means for you?
As a job seeker, it opens up a lot of opportunities. If you are remotely interested in new technologies and specifically blockchain, you are all set to transform the next revolution in the market. The demand for blockchain-based skill is important and if you have the required skill, you are bound to grow.
However, you first need to prove yourself to the startups or companies that are hiring for the position. Interviews are the most common ways to get into companies. That’s why you need to go through top blockchain questions. These blockchain interview questions will help you prepare and clear the interview with confidence. As a candidate, you need to go through a heap of questions about blockchain. This is where we come in as we are going to discuss 50 blockchain questions and answers.
All of these questions have a different level of difficulty attached to it. To ensure that you can go through them without any issue, we will group similar questions. These questions will help you engage with the answers thoroughly and prepare in the best form possible. So, let’s get started with the 50 blockchain interview questions.
Note: if you are a hiring manager, you can also use this top blockchain questions as a reference for filtering the candidate. The questions on blockchain technology will surely help to create a powerful and appealing interview. In short, these are the blockchain questions to ask.
Top 50 Blockchain Interview Questions
Blockchain Interview Questions: Basic Level
1. Why blockchain is trustworthy?
Blockchain is a peer-to-peer network that has its consensus algorithm. The main reason behind its trustworthiness is how it stores and deal with data. It uses cryptographic algorithms to ensure that the data is protected against any third party malicious actor. This means only the entity that owns the data will be able to access it. Also, the data stores in the blockchain can be traced anytime which brings in transparency. One more thing that makes blockchain trustworthy is the data integrity feature. With this feature, data cannot be changed after it is written.
Note: This is one of the most common questions about blockchain.
2. What is Ethereum?
Ethereum is a decentralized system just like bitcoin. It is completely decentralized which means that there is no centralized authority controlling it. It is developed by Vitalik Buterin and uses a different approach when compared to bitcoin. Just like bitcoin, digital payments can be done on the platform. It uses smart contracts to automate legal contracts within two peers. dApps(decentralized apps) is an app that runs on Ethereum and use smart contracts to manage an organization or a specific part of the project.
3. What is a public key?
A public key is used in the cryptographic algorithm that allows peers in a blockchain to receive funds in his wallet. The public key is attached to a private key creating a pair of keys. Both the pair of the private-public key is used to ensure that the security of the blockchain is ensured. A public key is an alphanumeric string that is unique to a particular node or address.
4. What is a private key?
A private key is an alphanumeric phrase that is used in pair with a public key to provide encryption and decryption. It is part of cryptographic algorithms that are used in blockchain security. The key is assigned to the key generator and should stay with him only. If he fails to do so, anyone can access the details or data located within the wallet or the address for which the private key is assigned.
5. What is the difference between ethereum and bitcoin blockchain?
A blockchain is a distributed peer-to-peer network. It offers peers to record immutable data and transparency. The difference between bitcoin and ethereum is their approach. Ethereum, being the 2nd generation blockchain solution improves on bitcoin in almost every possible way. The main difference is how they are trying to solve the industry problem. Conceptually, bitcoin is a digital currency whereas ethereum is about smart contracts. Ethereum is also energy efficient as it uses Proof-of-Stake(PoS) consensus algorithm compared to bitcoin’s Proof-of-Work(PoW). This also makes ethereum more scalable compared to bitcoin.
6. Explain the components of a blockchain ecosystem?
Blockchain ecosystem has four main components. They are as follows.
- Node application
- Shared ledger
- Consensus algorithm
- Virtual Machine
Each plays a crucial role in ensuring that the blockchain ecosystem works as intended.
Note: This is one of the most important questions on blockchain technology. We suggest reading more about the blockchain ecosystem, as the interview can easily ask to follow up questions depending on the answer you give.
7. What are the different types of blockchain technology/ledger?
There are many different types of blockchain technology(ledger). The first type of ledger that we know from bitcoin is the public blockchain. They are truly decentralized in nature. Other types of blockchain/ledger are listed below.
- Public blockchain
- Private blockchain
- Consortium or Federated blockchain
8. Is the blockchain totally different from banking ledger?
Banking ledgers are used to ensure that the transactions can take place correctly. That’s why they trace and timestamp transactions. The significant difference between a banking ledger and a blockchain is how they are governed. The blockchain is decentralized in nature; however, banking ledgers are completely centralized as banks govern them. The blockchain is completely transparent and trustworthy when compared to bank ledgers. Banks are keen on blockchain technology as they can automate most of their banking functionalities, and also provide a trustworthy approach. However, are more likely to use federated blockchain or private blockchain to ensure that they still have control over their operations.
Note: This question is also common in blockchain exam questions if you are appearing in a written format.
9. What is public blockchain? Give examples.
A public blockchain is public in nature. They are entirely decentralized where anyone can read, write and join. No central authority controls the blockchain. Also, all the data can be validated as data once are written cannot be altered. Key examples of public blockchains include bitcoin and ethereum.
10. What is private blockchain? Give examples.
A private blockchain is private in nature. They operate with a central authority in control. This way they allow access to the blockchain only to selected users. It is not accessible to everyone which makes it ideal for banks and other centralized organizations. Example, Hyperledger.
11. What is federated blockchain? Give examples
Federated blockchain is a blockchain that is run by a group. This makes them faster and scalable as the group dedicates the validation of the transactions. To get started, pre-selected nodes are made leaders. These nodes that dictate both the transactions and also the persons that can participate in the blockchain. Example include EWF, R3, etc.
12. What are the key features/properties of blockchain?
There are many key features of blockchain. They include the following.
- Blockchain as a data structure: Blockchain can act as a data structure and store different types of data including identity information, insurance, medical and so on.
- Immutability: The data once stored in blockchain is immutable. This gives the blockchain tamper detection property as well.
- Data protection: As the owner of the data is the source peer itself, data protection is completely dependent on the source. The absence of third-party actors also means that it is secure and offers best data protection
- Decentralized ledger technology: The decentralized ledger technology is the most important feature of a blockchain. It can be used by a private organization or public in a variety of use-cases.
- Better user anonymity: Users are relatively hidden compared to other traditional networks.
- Double spending: Blockchain solves double spending problems using consensus algorithms and distributed ledger technology.
Note: This question is also common in blockchain exam questions if you are appearing in a written format.
Blockchain Interview Questions: Listicle Type
13. What are the benefits of blockchain to ensure proper safety?
There are six key principles that can ensure proper safety and allow organizations to create appropriate transactional records.
- Securing applications
- Database security
- Digital workforce training
- Proper testing methods
- Continuity planning.
14. What are the benefits of blockchain?
The top benefits of blockchain include the following
- Improved transparency
- Increased security
- Better traceability
- Increased speed and efficiency
- Reduced costs
15. What are the drawbacks of blockchain?
Blockchain is not free from drawbacks or disadvantages. The cons are listed below.
- Complex technology which is hard to implement and maintain
- Scalable issues are still there
- Network speed and transaction costs vary
- Human error is still not eliminated
16. What are the businesses benefits of blockchain?
Businesses can make a lot of benefit from the use of blockchain. They are
Blockchain Interview Questions: Medium Difficulty
17. What are blocks in blockchain technology?
A block is part of the bitcoin network. Transactional data is permanently stored in a block. Also, the blocks are always sequential, and new data is added to the latest block. In simple words, it is a record book with a fixed size to it. Once a block is completed, a new block is generated which is then attached to the chain of blocks. This is where the name of “block” chain came. All the information in the block is encrypted and can only be accessed by the receiver and sender.
18. How blocks are created?
Blocks are created automatically by blockchain when the block size is reached. As the block is a file, the transactions are kept on the file until it becomes full. They are listed linearly and are connected so that the latest block is connected with the previous one. To identify a block, a hash value is generated using a mathematical function. It also indicates any changes that are made to a block.
19. How are blocks changed together?
A hash value assigned to a block is used to chain them together. If the hash value is changed, this means someone is trying to spoof the data stored in the hash. The link between blocks is done by storing the hash value of the previous block. For example, block 3 will store the hash value of block 2 and so on.
20. Can blocks be removed from a blockchain?
The removal of blocks from a blockchain entirely depends on how it is handled. It is not possible to manually remove a block. However, if it is lost, the blockchain generally tries to rebuild the database using other peers. Once they are verified, they can be deleted to lower the blockchain size as it is not required anyone to do normal operations. It can be re-downloaded again when needed. This process is known as pruning.
21. Can the data stored in a block modified once it is written? If so, why?
The data stored on the blockchain is protected with proper encryption using a digital signature. This makes the data written in a block as a one-time process only. It cannot be altered by any means.
22. What type of records can be kept in a blockchain?
Blockchain acts as a data structure which means that it can be used to store any form of data. Industries can make proper use of blockchain record types as they can completely take advantage of what it has to offer. The most common types of records/data that can be kept in blockchain are as follows.
- Identity management
- Transaction processing
- Medical records
- Management activities
- Business transactions
And so on.
23. How is blockchain distributed database different from traditional databases?
Traditional databases work in the form of a client-server relationship. The client can modify data and uses a centralized server to store all the information. Authentication is required to gain access to the data which makes the database administrator a powerful entity in the whole setup.
Blockchain database is completely decentralized and consists of several nodes. The nodes take part in the consensus when a new data is added. It provides a complete decentralized solution. Blockchain database offers better transparency and integrity. One more difference between these two types of databases is how they read and write data. The traditional database uses CRUD whereas blockchain uses sequential data writing.
If you want to prepare against similar blockchain questions regarding the database, we recommend reading the Blockchain vs. Database article.
24. What is block identifiers?
Every block on a blockchain has a unique identifier. It is the hash value that acts as a unique identifier. This means that no two blocks identifiers will be identical.
25. How the security of a block is maintained?
The security of the blocks is kept by connecting each block to the previous one using hash identifiers. This means that the block data cannot be changed or altered as the hash value will change. Moreover, each data stored in a block is also protected using cryptography. The data can be unlocked by the network participant who created it in the first place. The private key is required to access the data. The transactions that are stored in a block is digital signed and hence once stored cannot be altered, giving the block the required integrity and transparency when needed.
26. What is double spending?
Double spending is the process of spending the same digital currency twice without the network security noticing it. Double spending is one of the biggest problems in the market, and the financial institution takes extra caution to ensure that they prevent double spending at any cost. It is mainly done by duping the network to think that the original amount is never spent, making it available to be used for other transaction.
27. How double spending can be stopped in a blockchain?
Double spending is prevented by blockchain with the help of the consensus algorithm. The consensus algorithm ensures that the transaction is genuine and records it in the block. It is thus verified by multiple nodes making double spending possible. However, 51% network attack can make any blockchain vulnerable to double spending as more than 50% of the network is controlled by one entity.
Blockchain Interview Questions: Topic – Consensus Algorithms
28. What is Consensus algorithm?
Consensus algorithm is the method of gaining consensus on a change of a data over the system or distributed network. Consensus algorithms are heavily used in blockchains as they enable the network of unknown nodes to reach consensus on the data that is being stored or shared through the blockchain. Some of the most popular consensus algorithms include Proof-of-Stake(PoS) and Proof-of-Work(PoW)
29. What are the types of consensus algorithms?
There are many types of consensus algorithms or techniques out there. The most popular consensus algorithm includes
- Delegated Proof-of-Stake(DPoS)
- Proof-of-Elapsed Time(PoET)
- Byzantine Fault Tolerance
30. How does Proof-of-Work(PoW) consensus algorithm works?
Proof-of-Work(PoW) works by asking nodes to provide proof of their work by providing the necessary computation power to solve tough mathematical puzzles. The transactions are stored in blocks where block difficulty determines the difficulty of mining for miners. The miners are the special nodes that take part in the providing the computational power to the blockchain. The process is known as mining.
31. How does Proof-of-Stake(PoS) consensus algorithm works?
Proof-of-stake works through token staking. Rather than solving tough mathematical computational puzzles, tokens or coins are staked on nodes. These special nodes that take part in the consensus process by staking from a user. The nodes always have a chance to be chosen to validate a block of the transaction. They win a reward once they validate transactions successfully.
32. What is the difference between Proof-of-Stake(PoS) and Proof-of-Work(PoW)?
The difference between the two most popular consensus algorithm, PoW, and PoS, is how they operate. PoW is energy-hungry whereas PoS isn’t. Other key differences include the need for huge computation power in PoW compared to no or less computation power in PoS. PoS is also cost-effective and offers faster completion time when compared to PoW.
Blockchain Interview Questions: ICOs, dApps and Smart Contracts.
33. What do you understand by ICO?
ICO stands for Initial Coin Offering. It is similar in concept with an IPO(Initial Public Offering). ICO is used by startups or companies to raise capital for their product. It can be a direct blockchain product or a product that utilize the benefits of the blockchain. To raise the money they sell their platform or service tokens.
34. Is ICO understanding required to get a complete picture of blockchain technology?
ICO is one of the important parts of the blockchain ecosystem. This doesn’t mean that you need to learn about ICO and how they are implemented. But, in the current market, having an ICO understanding is always a good thing to have. ICO is one of the best use-cases of blockchain technology.
35. What are the popular platforms for developing blockchain applications?
The most popular platforms for developing blockchain applications include Hyperledger Fabric, Ethereum, R3 Cords, Quoru, and Ripple.
36. What is Hyperledger?
Hyperledger is an open source collaborative effort to improve blockchain. It offers an enterprise-grade framework. The tools will help to strengthen blockchain implementation across multiple sectors including manufacturing, supply chains, finance, etc. The Linux Foundation manages it.
37. What is smart contract?
A smart contract is best defined as a computer code that lets you enforce rules and regulations between two parties that are going to interact to carry out a deal. The agreement once is written can be executed automatically for any number of times. Smart contracts is a legal agreement that is written with the help of code. It is widely used in blockchain to automate tasks and also bring transparency to a particular system. For example, smart contracts can be used to sell or own real-world assets.
38. How is smart contract development related to blockchain technology?
Smart contracts are introduced to automate a legal contract between two peers. To make blockchain efficient, smart contract development is necessary. Ethereum handled it pretty well from the start and introduced the idea. Bitcoin can also use smart contracts, but not natively. You need to use RootStock smart contract platform to make smart contracts run on bitcoin. The development is necessary for blockchain technology to evolve and solve more problems.
39. What is dApp?
dApp also stands for “decentralized application” that runs on a blockchain. Smart contracts are used to automate different functionality of the dApp. As it is an application, more than one peer can participate and is not controlled by a single entity. dApps generally follow a protocol or algorithm and also require an incentive attached to its functionality. Lastly, it is a completely open source.
40. How is dApp different from an app?
dApps run on a decentralized network or system whereas apps, in general, are not designed to work in a decentralized ecosystem. dApps are the next generation apps that take advantage of blockchain and runs on it. Popular blockchain solutions that support dApps include NEO and Ethereum.
41. How are dApp different from a smart contract?
dApps are the decentralized app that fulfills a particular action or feature on the blockchain. It is maintained by an organization so that they can effectively automate some or complete processes. Smart contracts, on the other hand, are made to act as two peers under pre-defined rules using code. Unlike smart contracts, dApps can be accessed by multiple peers at any given time.
42. What is Solidity?
43. What are the main use cases of Solidity?
The main use case of Solidity is to build smart contracts and dApps on ethereum blockchain. It can be used to create an open-source version of smart contracts. The smart contracts created using Solidity can be used to store data, take a particular action when a condition is met or merely stop a particular action. Smart contracts need to be developed by humans before it is deployed on the blockchain.
Blockchain Interview Questions: Generic Questions
44. What is cryptocurrency mining?
Cryptocurrency mining is the process of validating transactions on a blockchain and ensuring it is validated and written on a block. Mining is carried out by miners who use costly computation equipment to provide consensus to a blockchain. Mining is mostly used by Proof-of-Work(PoW) consensus algorithm where the miner has to solve complex mathematical puzzles. They are rewarded for their work.
45. Can blockchain be hacked?
The blockchain is fairly secure for the most part. However, it is not completely secure. There are many different types of hacks that can be carried out by hackers. For example, Sybil attack, Routing attack, Direct Denial of Service and so on. 51% attack is also a prominent attack that can be used by hackers to steal information or coins. Other vulnerabilities include on how systems or platforms are implemented that leaves it vulnerable. Decentralized Autonomous Organization(DAO) are vulnerable to attacks.
46. How useful is blockchain to digital protection and cybersecurity?
Blockchain is an anti-tamper solution that can help data-sensitive information to be protected. This means that blockchain can be useful to both cybersecurity and digital protection. Other key features of blockchain that helps it to provide value to digital protection and cybersecurity are transparency, integrity, and a decentralized approach. Cryptography is also used in blockchain which also protects data and improves cybersecurity.
47. What is Metamask?
Metamask is a web app that lets you connect with Ethereum dApps directly from your browser. This means that you don’t need to have a full Ethereum node to access dApps and its functionalities.
48. What is the lightning network?
The lightning network is an off-chain and scalable solution to improve the working of bitcoin. It will bring instant transactions at low or no cost associated with it. Moreover, it will make bitcoin more scalable by taking the majority of the hard work off-chain. The lightning network is in active development and is already being used by many vendors.
49. What is atomic swap?
Atomic swap enables faster transfers thanks to the use of smart contracts. It is a revolutionary technology that allows peers to exchange one cryptocurrency to another without any intermediary exchange. It is done off-chain and between two different blockchains.
50. What do you think about the future of blockchain?
The future of blockchain is bright. It is currently in its growth phase where it is growing in both technologically and adoption. Its use-cases in almost all the different sector speak volume about its future. With more and more investors interested in blockchain technology, we will see a huge impact of the blockchain, both industrially and day-to-day life. It will also be used in conjunction with other technologies including AI, big-data, etc. to make it more effective and practical.
This leads us to the top 50 blockchain questions and answers. All these questions on blockchain technology will help you get ready for the big interview. So, what do you think about the top blockchain interview questions? Comment below and let us know.