Blockchain Basics Quiz & Flashcards for Fundamentals

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Questions and Answers

What is a characteristic of Bitcoin?

It is controlled by a central authority
It is limited to a specific geographic region
It operates without a financial system or government authorities (correct)
It uses physical currency

What is the purpose of a blockchain in Bitcoin?

To set transaction fees
To record all cryptocurrency transactions (correct)
To store users' private keys
To facilitate peer-to-peer transfers

What is the function of a wallet in Bitcoin?

To set the transaction fee
To store bitcoin transactions
To verify transactions on the network
To view your balance (correct)

What is required to send a bitcoin?

The receiver's address and your private key (B) Signup and view all the answers

What happens after you send a bitcoin?

The receiver must wait for the transaction to be verified by the network (D) Signup and view all the answers

What is a bitcoin transaction?

When you send or receive a bitcoin (A) Signup and view all the answers

Why is a blockchain compared to a community bank?

Because it stores everyone's funds (C) Signup and view all the answers

What is the purpose of entering your private key when sending a bitcoin?

To authenticate the sender (C) Signup and view all the answers

How long does it take for a transaction to be verified by the network?

Up to 30 minutes (A) Signup and view all the answers

What is the term for the fee associated with sending a bitcoin?

Transaction fee (B) Signup and view all the answers

What is the primary advantage of using blockchain technology for transactions?

Sending money directly between individuals in seconds (C) Signup and view all the answers

What is the term 'blockchain' referring to?

A decentralized public ledger (B) Signup and view all the answers

How do blockchains store information?

In blocks linked together via cryptography (D) Signup and view all the answers

What is the most common use of blockchain technology?

Keeping a ledger of transactions (A) Signup and view all the answers

What is the main component of a blockchain that resists modification?

The cryptographic hash (D) Signup and view all the answers

What is a block in a blockchain composed of?

A header, data section, and a hash (D) Signup and view all the answers

How does blockchain technology reduce the time for transactions?

By avoiding the long process of traditional banking (B) Signup and view all the answers

What is the purpose of the hash in a blockchain?

For verification purposes (B) Signup and view all the answers

What is the nature of the blockchain network?

Decentralized and distributed among nodes (D) Signup and view all the answers

What is unique about the way blockchain stores data?

It stores data in blocks linked together via cryptography (A) Signup and view all the answers

What is the main purpose of a hashing algorithm in blockchain?

To take an input and return a fixed-size string of characters (D) Signup and view all the answers

Why is it difficult to alter a block in a blockchain?

Because it is linked to the previous block through a hash (C) Signup and view all the answers

What is a key feature of a distributed database in blockchain?

All nodes have a copy of the ledger (D) Signup and view all the answers

What is the main benefit of removing dependency on third-party trust in blockchain?

It reduces the need for intermediaries (B) Signup and view all the answers

What is the role of users in a blockchain network?

To validate and add blocks to their ledgers (B) Signup and view all the answers

What is a benefit of using blockchain technology?

It reduces the need for intermediaries (A) Signup and view all the answers

What is the relationship between blockchain and Bitcoin?

Blockchain is the technology that supports Bitcoin (B) Signup and view all the answers

What is a characteristic of a blockchain?

It is a distributed ledger (D) Signup and view all the answers

What is the role of a hash in blockchain?

To link blocks together (B) Signup and view all the answers

What is a benefit of using blockchain technology in transactions?

It reduces the need for third-party verification (B) Signup and view all the answers

Study Notes

Bitcoin Overview

Bitcoin is a decentralized digital currency, operating independently of financial authorities.
Peer-to-peer transfers occur over a digital network that records all transactions.
The Bitcoin blockchain functions like a community bank, storing users' funds and balances visible through digital wallets.

Bitcoin Transactions

Sending bitcoins requires entering the recipient's address and private key in the wallet application.
Transaction fees must be agreed upon before pressing the "send" button.
Verification of a transaction can take up to 30 minutes.

Blockchain Technology

Blockchain enables direct financial transactions without banks, streamlining the process and reducing fees.
It consists of a distributed peer-to-peer ledger, composed of linked records called "blocks."
Blockchains store data in blocks which are securely linked via cryptography, differing from traditional databases.

Structure of a Blockchain

Each block contains:
- A header with metadata, such as a timestamp and the previous block's hash.
- A data section for transactions and smart contracts.
- A hash that uniquely verifies the block's content.
Hashing serves as a way to ensure integrity and chronological order in the blockchain.

Key Properties of Blockchain

Immutability: Data is irreversible, ensuring trustworthiness. Altering any block invalidates subsequent blocks.
Distributed Ledger: Multiple copies of the blockchain exist across nodes, preventing unauthorized alterations; there's no central administrator.

How Blockchain Functions

Users form networks based on shared trust without requiring third-party verification.
Each user possesses a ledger for transactions; transactions are broadcasted to all network users for validation.
Users check balances and approve transactions, which are then added to their ledgers.

Benefits of Blockchain

Time-saving: Eliminates the need for central authority verification, speeding up processes.
Cost-saving: Reduces expenses by removing intermediaries and minimizing transaction efforts.
Enhanced Security: Data integrity is maintained across shared copies, protecting against cybercrimes.
Collaboration: Facilitates direct interaction among parties, eliminating reliance on third-party negotiations.
Reliability: Verifies identities, minimizes redundancy, and accelerates transactions.

Distinction Between Blockchain and Bitcoin

Blockchain is a versatile technology supporting various applications, while Bitcoin specifically refers to a currency using blockchain for security.

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Description

Learn about the basics of blockchain technology, a decentralized system that enables fast and secure transactions without intermediaries. Discover how it works and its benefits.

Blockchain Technology Fundamentals

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