lecture 10

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Questions and Answers

What is the primary motivation for miners to participate in the mining process?

New block reward (correct)

Avoiding zero transaction fees

Transaction fee

Access to system history

What happens when multiple miners find a valid nonce simultaneously?

Only one block is added to the blockchain (correct)

The block with the lowest hash is chosen

All miners receive the block reward

The slowest miner gets the reward

Why is the mining process described as based on luck?

It requires specific coding skills

Tools for mining are expensive and rare

There's no guaranteed success after multiple attempts (correct)

Miners must work collaboratively to succeed

Which statement reflects the expectation of finding a valid nonce related to the SHA-256 hash threshold?

One successful attempt is expected every 2^56 attempts Signup and view all the answers

What happens to the block reward for Bitcoin every 210,000 blocks?

It decreases by half Signup and view all the answers

What is the result of having cheap system attacks in mining?

Decreased system security Signup and view all the answers

What does the statement 'easy to verify, hard to prove' mean in the context of mining?

Verification of a nonce is straightforward, but proving its discovery is complicated Signup and view all the answers

How does sentiment towards transaction fees differ as the bitcoin system matures?

Transaction fees become more dominant Signup and view all the answers

What is the primary purpose of blockchain technology?

To record transactions in a decentralized manner. Signup and view all the answers

Which statement best describes how traditional ledgers operate compared to blockchain ledgers?

Centralized entities dominate the truth in traditional ledgers. Signup and view all the answers

What motivates nodes to include a transaction in a block?

Receiving transaction fees. Signup and view all the answers

What happens when a node successfully mines a block?

The node receives a reward larger than the transaction fees. Signup and view all the answers

What is meant by 'consensus' in the context of blockchain?

The agreement of nodes on the validity of transactions. Signup and view all the answers

Why is it stated that blockchain is not truly a democracy in terms of votes?

The process is dictated by mining power rather than a one-person-one-vote system. Signup and view all the answers

What is a challenge that arises in the blockchain network during transactions?

Eventually confirming transactions may theoretically take an indefinite time. Signup and view all the answers

What is the primary purpose of hash functions in a blockchain?

To provide a short representation of data. Signup and view all the answers

Which aspect of blockchain ensures every node has control over the data?

The distributed ledger allowing all nodes access. Signup and view all the answers

How does a change in the data of a block affect the blockchain?

The subsequent blocks' hashes will no longer match, indicating tampering. Signup and view all the answers

Why might blockchain encourage centralization despite its decentralized nature?

Because all nodes must store the entire blockchain. Signup and view all the answers

What characteristic of hash functions contributes to blockchain security?

The deterministic nature where the same input always yields the same output. Signup and view all the answers

What is included in the hash of a block to ensure its integrity?

The hash of the previous block and the current block's payload. Signup and view all the answers

What is the consequence of a collision in hash functions?

Blocks can become invalid if the same hash is produced for different data. Signup and view all the answers

What is the genesis block in a blockchain chain?

The first block from which all subsequent blocks are derived. Signup and view all the answers

How is a blockchain structured?

As a singly linked list where each block references only the previous one. Signup and view all the answers

What occurs when two miners simultaneously propose blocks with valid nonces?

A state fork happens and the longest chain rule applies. Signup and view all the answers

How does blockchain provide traceability in physical world transactions?

Through hash comparison that detects any changes. Signup and view all the answers

Why might blockchain not be the ideal database for storing data?

It has limited throughput compared to traditional databases. Signup and view all the answers

Which area is identified as suitable for blockchain technology?

International and universal currency systems. Signup and view all the answers

What is the main reason Bitcoin is often used in the black market?

It offers anonymity and operates outside traditional financial systems. Signup and view all the answers

What is a key advantage of using hash functions in blockchain?

They detect even the smallest change in data. Signup and view all the answers

What are miners encouraged to do in order to avoid forks?

Broadcast their transactions early with a good network. Signup and view all the answers

What is the role of reputational trust in blockchain's effectiveness?

It enhances trust among users in decentralized systems. Signup and view all the answers

Study Notes

INF2003: Database Systems Blockchain

Course: INF2003 Database Systems Blockchain
Semester: AY24/25 Trimester 1
Instructor: Zhang Wei
Date: Nov. 19, 2024

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What is Blockchain?

Originally for recording transactions.
Transactions organized as blocks.
Blocks are encrypted and chained chronologically.
Blockchain is accessible globally.
Traditional ledgers (e.g., OCBC) are centralized.
With a centralized ledger, a central entity always holds the truth.
Discrepancies are resolved through reconciliation with the central entity.
Blockchain is decentralized; all nodes have the truth, and all have the say.
Consensus is required if people have differing opinions.

Process

User initiates a transaction with digital signature.
Transaction details are broadcast to all nodes.
Nodes choose to process or record transactions.
Transactions are bundled into a block.
A block includes previous block's hash.
Motivating nodes to include transactions: transaction fees.
Priority given to higher transaction fees.

Process (Can I add my block to the chain?)

All nodes want to add a block to the chain.
Only one block can be added at a time.
Mining process: competing for the right to add a block.
Initial reward for adding a new block is much higher than transaction fees.
The node that wins the competition adds the new block.
Other nodes must acknowledge the win.
Consensus protocol is necessary.
New block reflects the "truth" accepted by all.
Chain continues to grow.

Supporting Technology

Uses new concepts with existing technologies.
Each full node keeps a copy of the entire blockchain.
Problem: blockchain can become very large.
Main cryptographic techniques are keys and hash functions, specifically for blocks.
Hash function: h(x) converts a long item (x) to a short hash (h(x)).
Hash function is deterministic; same input always produces the same output.
Collision: different inputs producing the same outputs.
SHA256 is a frequently used hash function.
Hash value has a fixed length (e.g., 256 bits).

Hash

Blockchain blocks primarily use hash values, not raw info.
Same block with the same hash function.
Any change in the block results in a different hash, enabling validation.
Fast operations due to hash-based structure.
Chain starts with Genesis block (block 0).
Hash of the block includes all relevant information.
Subsequent blocks reference the hash of the previous block.

Why Blockchain Cannot Be Tempered?

Transferring 100 SGD to a recipient;
Attempting to change the amount in a previous block.
Attempt results in changing block's hash, which is incompatible with the previous block's hash.

Motivation to Participate

Users may want to only use the system and not contribute.
Some jobs to keep a copy of the historical and current state.
Package transactions.
Add new blocks.
Motivation to participate: transaction fees and new block rewards.
Initial stage: block reward dominant.
System matures: transaction fees become increasingly important.

Motivation to Participate (Finding a Nonce: Called Mining)

Finding a 'nonce' (a special number) is called mining.
Multiple nodes (miners) can successfully mine and add a block simultaneously.
Receiving reward based on valid nonce and block.
Transaction fees and block rewards.
Example: Bitcoin reward decreases over time.

Proof of Work

Finding a valid nonce is like guessing repeatedly.
Probability of success is low; only successful miners receive rewards.
System attack is costly.
Hash threshold (e.g., 2^200 for SHA-256).
Each digit has a 50% chance.
Computationally intensive to achieve a valid nonce.
Slower expansion of blockchain.
Costly to cheat.

Disagreement?

World is not perfect & nodes might add blocks with differing views.
"State fork" – multiple different chains.
"Longest chain rule": only the longest chain is considered valid.
Miners broadcast the longest chain, and any different chain is discarded.

Discussion

Is blockchain a good database?
Record-keeping system is less efficient for CRUD operations than traditional databases.
Blockchain better for immutability and traceability.
Suitable areas for blockchain include international transactions, anti-counterfeiting, and other applications requiring immutability.

Summary

Lack of trust between parties.
Distributed record keeping (managed by all participants).
Agreeing on a history that everyone can trust leads to agreement on the present.
Blocks chained using hashes (every block links to the preceding block).
Raw data not stored, only hash of blocks is stored.
Hash mismatch occurs if a block is tampered.
Proof-of-work: incentivizes participation; nodes with the most computing power are more likely to add blocks.
Security and fairness.
Transaction fees play a larger role as the system matures.

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blockchain