Blockchain Technology Fundamentals Quiz

Blockchain Fundamentals: A Comprehensive Guide

• Blockchain is a distributed ledger technology that enables secure and transparent transactions without the need for intermediaries.

• A blockchain network consists of nodes that run the blockchain's software to validate and store the complete history of transactions.

• Blockchains are suited for smart asset lifecycle management and financial use cases that require transparency and reduced need for intermediaries.

• Distributed Ledger Technologies (DLTs) are similar to blockchains but can have different structures and are suited for multiple use cases.

• Blockchains have four layers: Infrastructure, Logical, Application, and User Interface.

• There are different types of blockchains, including Layer-0, Layer-1, Layer-2, permission-less, permissioned, federated, and EVM-compatible chains.

• Blockchain consensus mechanisms are the heart of blockchains, and there are over 75 consensus algorithms, including Proof-of-Work (PoW), Proof-of-Stake (PoS), and Delegated Proof of Stake (DPoS).

• Blockchain bridges allow the transfer of assets between different blockchains, and they can be trusted or trustless.

• Blockchain forks occur when a single blockchain splits into two, and they can be hard or soft forks.

• Blockchain addresses consist of a public key and a private key, and they are used to send and receive crypto assets.

• Blockchain wallets are designed to store and manage crypto assets securely, and there are four main types: hot wallets, cold wallets, paper wallets, and hardware wallets.

• Merged mining is the process of mining two or more blockchains at the same time, and it increases the profitability and performance of mining.Key Points on Blockchain and DLT

• Metamask wallets provided by crypto exchanges are custodial, meaning the private keys are under the control of the exchange, putting your crypto at risk if they go bankrupt.

• Blockchain networks use record-keeping models to determine the provenance and ownership of coins, with three types of models: Bitcoin transaction model, UTXO model, and account/balance model.

• Blockchains and DLTs are often used interchangeably, but there are important differences: a blockchain has a linear chronological structure, while DLTs can have different structures, and DLTs are suited for multiple use cases.

• Blockchain is suited for smart asset lifecycle management, increases transparency, and reduces the need for intermediaries in financial use cases.

• Blockchain developers build a variety of projects such as crypto wallets, payment systems, tokens, marketplaces, DeFi projects, oracles, scaling solutions, and metaverse assets.

• The Government of India's National Strategy on Blockchain lists 44 use cases for blockchain technology.

• Mindmaps can be a useful tool to understand and visualize the complex concepts of blockchain and DLTs.

• Not your keys, not your coins is a common phrase in the cryptocurrency world, reminding users to keep their private keys secure.

• UTXO model can be compared to spending banknotes and getting back change, while the account/balance model can be compared to spending using a debit or credit card.

• DLTs can have different structures, such as directed acyclic graphs (DAGs) or hashgraph, which are not linear like blockchains.

• Blockchain and DLTs have potential use cases beyond finance, such as supply chain management, voting systems, and identity verification.

• Blockchain's decentralized nature makes it resistant to censorship and manipulation, making it a potential tool for promoting democracy and transparency.