Blockchain Exam Graded A+

Blockchain Exam Graded A+ Session 1 - Answer- Intro to Blockchain Technology o Describe what problems blockchains solve - Answer- Eliminates third party intermediary Substantially reduces transaction cost Settles almost instantaneously Is not vulnerable to attack Is totally trustworthy Keeps private information private Blockchain solves the problem of having a centralized authority that can make errors with data by being distributed (having multiple copies existing in different places and being synced). It also cuts out intermediaries (depending on the application) such as in cryptocurrency where normally each intermediary would take their 'piece of the pie' with blockchain there is no need. When things such as transactions are posted, they can never be erased. o Define what is meant by a distributed ledger - Answer- A distributed ledger is a database that is consensually shared and synchronized across multiple sites, institutions or geographies. Allows transactions to have a public "witness", thereby making a cyberattack more difficult. o Explain how blockchains avoid alteration - Answer- Blockchains can only have information written on it, not destroyed. If one tried to change the data of one block, they would have to change the entire blockchain following it. This is because each block stores a hash of its preceding block. Change in one hash will lead to change in all the following hashes. o Explain how one can verify the source of blockchain transactions - Answer- The way to verify the source of a blockchain transaction is by confirming someone's digital signature. The digital signature is a symmetrical o Explain what is meant by consensus in a blockchain - Answer- Consensus is the mechanism for ensuring that the copies of the blockchain remain consistent with one another over time. Consensus is shown in blockchain through different things called "consensus algorithms" (Proof of Work, Proof of Stake, etc.) o Identify the types of blockchains and describe how they differ - Answer- There are three types of blockchains: - Public: Allow anyone to read from and write to the blockchain and allow anyone to request posting a transaction to the blockchain. - Permissioned: o Require permission to read the information on the blockchain o Set who can serve the network by writing new blocks into the chain o Limit who can request o Makes consensus simpler because verifying transactions can be made a precondition for receiving permission. - Private: permissioned blockchains maintained by a single entity. o Explain at a very high level how smart contracts work - Answer- A smart contract is a computer code posted to a blockchain that gets executed automatically by the blockchain software when conditions specified in the software are met. Basically a smart contract starts with generally two conditions that each user has to meet. Once they both complete their respective tasks, the contract is established. o Identify some blockchain use cases and examples - Answer- Blockchain can be used as a cryptocurrency. As you can see with bitcoin, blockchain is used to create an online currency that holds value. Section 2 - Answer- Hashing Pt. 1 - Answer- Hash Function o Define what is meant by a hash function and describe its roles in a blockchain - Answer- A hash function is a form of cryptography that takes an input of any length and converts it to a seemingly random output of a fixed length. In blockchain, each block stores a hash of its transactions. This creates something called the root of a Merkle tree. This makes it easy to see if a given transaction is actually part of the blockchain. Blockchain also uses signatures to identify its originator and secure its contents. (The signature is a hash) Each block also stores the hash of the previous block. o List the requirements of a cryptographic hash function and describe why each is important - Answer- The requirements of a cryptographic hash function are: - Deterministic: It is deterministic (same input always produces the same hash (not random)) - Quick Computation: It is efficient - The number of possible hashes is very large. - No hash is more likely than any other hash. - A small change in the input will change the hash significantly to the point where it looks uncorrelated to the previous. - There is no algorithm that greatly reduces the number of inputs that have to be tried to obtain a given hash. o Describe how the SHA-256 hash function works - Answer- The SHA-256 hash function takes an input of any number of bits and creates multiple 512 bit blocks. It takes a 256 initialization vector origin and then adds it to a 512 bit making it 768 bits. Then it takes 768 bits and turns it into 256 bits. It does this with all the 512 bits that were part of the original message until its over and is a 256 bit hash of the original input. Pt. 2 - Answer- Hash Chains and Merkle Trees o Define a hash chain - Answer- A hash chain is a series of data items where every data item is combined with the previous hash to create a chain. This stores data in an unalterable way. o Explain why a block chain is an example of a hash chain - Answer- A blockchain is an example of a hash chain because each entry on the blockchain contains a hash of the block before it. o Define a Merkle tree - Answer- A Merkle tree is a data structure created from the hashes of a list of items. If any data is changed on the tree, the root will change, therefore the root serves as a fingerprint of all the items in the tree.