BLOCKCHAIN MOST COMMON QUESTIONS

Frequently Asked / Common Ques ons (Appeared in 2 or more papers)

Topic Frequency
Proof of Work (PoW) and Proof of Stake (PoS) 3 mes
Truffle and Truffle commands 2 mes
Forking in Blockchain (Hard and So forks) 2 mes
Hyperledger Fabric consensus algorithms 2 mes
Cer ficate Authority and Chaincode in Hyperledger 2 mes
Genesis Block and Block Header (Bitcoin) 2 mes
Bitcoin UTXO and transac on fees 2 mes
ERC20 tokens and their crea on 2 mes
ICO Launching Mechanism (Short note or direct ques on) 2 mes
Fungible vs Non-Fungible Tokens (NFTs) 2 mes

Predicted Ques ons for Upcoming Exam (High Probability)

Here are the most likely ques ons to appear based on the analysis:
Q1 (Short Notes/Concepts - 5 marks each)
Choose 4 out of these – typically comes from frequently repeated concepts:
 Explain Proof of Work and Proof of Stake consensus algorithms.
 What is forking in blockchain? Differen ate hard fork and so fork.
 Explain Truffle and list important Truffle commands.
 Differen ate between Fungible and Non-Fungible tokens.
 What are interoperability and scalability issues in Hyperledger Fabric?
Q2 - Q5 (Long Answers - 10 marks each)
Expect 3 out of these to show up:
 Explain consensus algorithms used in Hyperledger Fabric.
 Describe the genesis block and structure of a Bitcoin block header.
 What is a private blockchain? Features, drawbacks, and examples.
 Explain UTXO and how Bitcoin transac on fees are calculated.
 Describe ERC20 token standard and steps to create one.
 Explain the role of Cer ficate Authority and Chaincode in Hyperledger.
 Describe Ethereum architecture/components in detail.
 Discuss benefits and challenges of blockchain in the finance domain.
Q6 - Short Notes (Any 2)
Likely topics:
 Byzan ne Generals' Problem
 ICO Launching Mechanism
 Hyperledger umbrella projects
 Consensus in permissioned vs permissionless blockchains
 SOLUTIONS
1 . Proof of Work (PoW) and Proof of Stake (PoS)
Proof of Work (PoW):
 A consensus mechanism used to validate transac ons and add new blocks.
 Miners compete to solve a complex cryptographic puzzle.
 Requires significant computa onal power and energy.
 Used in Bitcoin and Ethereum (before the Merge).
 Once the puzzle is solved, the solu on (nonce) is verified by other nodes.
 First correct miner adds the block and receives a reward (block reward + transac on
fees).
 Prevents double spending and ensures network security.
Proof of Stake (PoS):
 Validators are chosen based on the number of coins they "stake" or lock in the
network.
 No computa onal race; hence, energy-efficient.
 Used in Ethereum 2.0, Cardano, Polkadot.
 Reduces centraliza on risk and promotes scalability.
 If a validator acts maliciously, their stake can be slashed.
Comparison Table:
Feature Proof of Work (PoW) Proof of Stake (PoS)
Energy Usage High Low
Equipment Needed Specialized mining hardware Basic validator node
A ack Resistance Depends on hash power Depends on stake amount
Transac on Speed Slower Faster
Scalability Limited More scalable
Examples Bitcoin, Litecoin Ethereum 2.0, Cardano

2. Truffle and Truffle Commands

Truffle Framework:
 A popular development framework for Ethereum-based smart contracts.
 Simplifies wri ng, tes ng, and deploying smart contracts using Solidity.
Key Features:
 Automated tes ng (Mocha/Chai).
 Built-in deployment system.
 Scriptable migra ons.
 Truffle Console for direct interac on.
Common Truffle Commands:
Command Descrip on
truffle init Ini alizes a new Truffle project.
truffle compile Compiles all smart contracts.
truffle migrate Deploys contracts to the blockchain.
truffle test Runs the unit tests for smart contracts.
truffle develop Starts a local blockchain for tes ng.
truffle console Opens an interac ve console to interact with contracts.
Example Workflow:
1. Ini alize project: truffle init
2. Write contract in /contracts
3. Compile: truffle compile
4. Deploy: truffle migrate
5. Test: truffle test
3. Forking in Blockchain (Hard and So Forks)
Forking:
 A split in the blockchain protocol resul ng in divergence of chain.
So Fork:
 A backward-compa ble update.
 Non-updated nodes can s ll validate new blocks.
 Example: SegWit update in Bitcoin.
Hard Fork:
 Not backward-compa ble.
 Requires all nodes to upgrade.
 Leads to permanent chain split if consensus is not achieved.
 Example: Ethereum and Ethereum Classic split a er DAO hack.
Feature So Fork Hard Fork
Compa bility Backward-compa ble Not compa ble
Consensus Needed Par al nodes All nodes must upgrade
Chain Split No (usually) Yes
Reasons for Forks:
 Security upgrades.
 Governance disagreements.
 Bug fixes or new features.

4. Cer ficate Authority and Chaincode in Hyperledger

Cer ficate Authority (CA):
 Issues digital cer ficates to par cipants in a permissioned network.
 Provides iden ty to peers using X.509 cer ficates.
 Ensures secure communica on and access control.
Chaincode:
 Equivalent of smart contracts in Hyperledger Fabric.
 Encodes business logic that governs transac ons.
 Deployed on the peer nodes.
 Wri en in Go, JavaScript, or Java.
 Executed by endorsing peers and validated by ordering service.
Working:
1. User submits transac on proposal.
2. Chaincode logic is executed on endorsing peers.
3. Endorsements collected and sent to orderer.
4. Validated and commi ed to ledger.

5. Genesis Block and Bitcoin Block Structure

Genesis Block:
 First block in a blockchain.
 Hardcoded in the so ware.
 No previous block (PrevHash = 0).
 Bitcoin’s Genesis Block created by Satoshi Nakamoto (Jan 3, 2009).
Block Structure in Bitcoin:
 Block Header:
o Version: Protocol version.
o Previous Block Hash.
o Merkle Root: Root of transac on tree.
o Timestamp.
o Difficulty Target.
o Nonce.
  Block Body:
o Transac ons list.
o Size can vary (up to 1 MB in Bitcoin).

6. Bitcoin UTXO and Transac on Fees

UTXO (Unspent Transac on Output):
 Remaining outputs from previous transac ons that can be used as inputs.
 Maintains a list of spendable outputs.
 Prevents double-spending.
How Fees Are Calculated:
 Fee = Input Value - Output Value
 Miners prefer transac ons with higher fees.
 Dynamic based on block size and demand.
Example:
 Input: 0.5 BTC, Output: 0.45 BTC to recipient + 0.04 BTC change to sender.
 Fee = 0.01 BTC.

7. ERC20 Tokens and Crea on Steps

ERC20 Token:
 A standard for fungible tokens on Ethereum.
 Implements a set of rules/func ons.
Core Func ons:
 totalSupply(), balanceOf(), transfer(), approve(), allowance(), transferFrom()
Steps to Create ERC20 Token:
1. Define Solidity version and import OpenZeppelin contracts.
2. Create contract inheri ng ERC20.
3. Implement constructor to set token name, symbol, and supply.
4. Compile and deploy using Truffle or Remix.
5. Verify on Etherscan or test using web3/MetaMask.

8. ICO Launching Mechanism

ICO (Ini al Coin Offering):
 Fundraising method using crypto tokens.
 Investors buy tokens in exchange for cryptocurrencies like ETH.
Steps in ICO Launch:
1. Project idea and whitepaper.
2. Token development (ERC20).
3. Website and dashboard for investors.
4. Wallet integra on (e.g., MetaMask).
5. Smart contract for sale.
6. Marke ng and community building.
7. Launch and distribu on.
Risks:
 Regulatory issues.
 Scams and rug pulls.
 No guarantee of token value.
9. Fungible vs Non-Fungible Tokens
Property Fungible Tokens Non-Fungible Tokens (NFTs)
Interchangeable Yes No
Divisible Yes No
Standards ERC20 ERC721, ERC1155
Use Cases Currency, u lity tokens Digital art, collec bles, real estate
Examples ETH, DAI CryptoPunks, Bored Apes, game items
Use Case of NFTs:
 Ownership of unique digital assets.
 Immutable proof of authen city and origin.
 Integra on in gaming, art, real estate, and music.