BLOCKCHAIN BASICS
Study Notes | Key Concepts, Revision and MCQs
1. What is blockchain?
Blockchain is a type of distributed digital ledger that records information in linked groups called blocks. Copies of the ledger
may be maintained by multiple computers in a network.
2. How it works
1. A transaction is proposed.
2. Network participants check it against the system's rules.
3. Valid transactions are grouped into a block.
4. A consensus process helps participants agree on the accepted record.
5. The block links to the previous block, forming a chain.
3. Key terms
• Block: A container for transactions or records.
• Hash: A fixed-length output from a cryptographic hash function; changes in input usually change the output.
• Node: A computer or participant that helps store or verify data.
• Distributed ledger: A record shared among multiple participants.
• Consensus: A method for agreeing on accepted records.
• Smart contract: Code that runs under specified conditions on a supported blockchain.
• Public key: A shareable cryptographic value used in systems such as digital signatures.
• Private key: A secret value that must be protected.
4. Main characteristics
• Shared records can improve coordination among participants.
• Linked hashes can make unauthorized changes to past records detectable.
• Some systems support smart contracts and audit trails.
• Public visibility varies; blockchain does not automatically provide privacy or anonymity.
5. Public vs permissioned blockchain
Public: Participation and record reading may be open to anyone; examples include public Bitcoin and Ethereum networks.
Permissioned: Access is restricted to approved participants, often for organizational workflows.
6. Possible applications
• Supply-chain tracking and product provenance.
• Digital credentials and selected identity systems.
• Shared record keeping between organizations.
• Smart-contract applications.
• Some payment and settlement systems.
7. Benefits and limitations
Potential benefits: shared records, traceability, and tamper-evident history.
Limitations: performance, storage costs, privacy, governance, software bugs, private-key loss, and energy use for some
consensus methods.
Important: Blockchain cannot guarantee that the original information entered into it is true.
Study Notes | Key Concepts, Revision and MCQs
1. What is blockchain?
Blockchain is a type of distributed digital ledger that records information in linked groups called blocks. Copies of the ledger
may be maintained by multiple computers in a network.
2. How it works
1. A transaction is proposed.
2. Network participants check it against the system's rules.
3. Valid transactions are grouped into a block.
4. A consensus process helps participants agree on the accepted record.
5. The block links to the previous block, forming a chain.
3. Key terms
• Block: A container for transactions or records.
• Hash: A fixed-length output from a cryptographic hash function; changes in input usually change the output.
• Node: A computer or participant that helps store or verify data.
• Distributed ledger: A record shared among multiple participants.
• Consensus: A method for agreeing on accepted records.
• Smart contract: Code that runs under specified conditions on a supported blockchain.
• Public key: A shareable cryptographic value used in systems such as digital signatures.
• Private key: A secret value that must be protected.
4. Main characteristics
• Shared records can improve coordination among participants.
• Linked hashes can make unauthorized changes to past records detectable.
• Some systems support smart contracts and audit trails.
• Public visibility varies; blockchain does not automatically provide privacy or anonymity.
5. Public vs permissioned blockchain
Public: Participation and record reading may be open to anyone; examples include public Bitcoin and Ethereum networks.
Permissioned: Access is restricted to approved participants, often for organizational workflows.
6. Possible applications
• Supply-chain tracking and product provenance.
• Digital credentials and selected identity systems.
• Shared record keeping between organizations.
• Smart-contract applications.
• Some payment and settlement systems.
7. Benefits and limitations
Potential benefits: shared records, traceability, and tamper-evident history.
Limitations: performance, storage costs, privacy, governance, software bugs, private-key loss, and energy use for some
consensus methods.
Important: Blockchain cannot guarantee that the original information entered into it is true.
