IS4302 Blockchain: Week 8 Quiz
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What are sidechains designed to do in relation to the main blockchain?

  • Replace the main blockchain completely
  • Serve as extensions with unique consensus mechanisms (correct)
  • Enhance the security of the main blockchain
  • Limit transaction fees on the main blockchain

Which platforms are known for establishing a 'network of networks' for cross-chain interoperability?

  • Bitcoin and Litecoin
  • Polkadot and Cosmos (correct)
  • Ethereum and Cardano
  • Ripple and Stellar

What role do oracles play in cross-chain interoperability?

  • They provide scalability solutions for blockchains
  • They protect against cyber attacks on blockchains
  • They feed off-chain data into blockchains for smart contracts (correct)
  • They facilitate token swaps between chains

How do bridges function in the context of blockchain networks?

<p>They allow ownership of assets to be locked while creating identical assets on another chain (A)</p> Signup and view all the answers

What is one key feature of decentralized exchanges in the context of cross-chain operations?

<p>They use atomic swaps to automatically exchange tokens from different chains (C)</p> Signup and view all the answers

What type of data is primarily stored on-chain in blockchain systems?

<p>Only metadata and hashes of raw data (B)</p> Signup and view all the answers

Which of the following storage options is considered free when providing data hosting?

<p>IPFS (D)</p> Signup and view all the answers

Which type of blockchain is characterized by having multiple designated validators?

<p>Consortium Blockchain (C)</p> Signup and view all the answers

What is a major disadvantage of public blockchains?

<p>High energy consumption (C)</p> Signup and view all the answers

Which of the following statements is true regarding private blockchains?

<p>They have one designated validator node. (C)</p> Signup and view all the answers

Which of the following is a use case for public blockchains?

<p>Decentralized applications (DApps) (A)</p> Signup and view all the answers

What storage cost is associated with Storj for data storage?

<p>$0.015 per GB/month (B)</p> Signup and view all the answers

In which blockchain scope are open and transparent applications most effectively utilized?

<p>Public Blockchain (A)</p> Signup and view all the answers

What is a primary benefit of using a private blockchain?

<p>Full control over access and modifications (A)</p> Signup and view all the answers

Which of the following use cases is best suited for a consortium blockchain?

<p>Collaboration between trusted partners (C)</p> Signup and view all the answers

What is a disadvantage of private blockchains compared to public ones?

<p>Less transparency (C)</p> Signup and view all the answers

Which blockchain structure allows for non-conflicting transactions from uncle blocks?

<p>BlockDAG (D)</p> Signup and view all the answers

What does the Greedy Heaviest-Observed Sub-Tree (GHOST) method increase?

<p>Throughput by allowing concurrent work (B)</p> Signup and view all the answers

Which feature does a public blockchain primarily provide?

<p>Decentralized governance for all users (A)</p> Signup and view all the answers

Which of the following characteristics is associated with Block Directed Acyclic Graph (DAG)?

<p>Allows more miners/validators to join without increasing conflicts (A)</p> Signup and view all the answers

What is a key drawback of private blockchains?

<p>Vulnerability to external attacks (B)</p> Signup and view all the answers

What was one of the innovations introduced by CryptoKitties in 2017?

<p>Gamification of breeding mechanics (D)</p> Signup and view all the answers

Which of the following statements about the NFT minting process is true?

<p>Minting ends with confirming the transaction. (D)</p> Signup and view all the answers

What is one of the challenges associated with NFTs, as mentioned in the content?

<p>Legal complications surrounding ownership (B)</p> Signup and view all the answers

In the context of NFTs, what does the term 'uniqueness' refer to?

<p>The distinctive ownership of digital assets (C)</p> Signup and view all the answers

What does 'NFT Interoperability' refer to in the context of challenges?

<p>The ability to transfer NFTs across different blockchains (A)</p> Signup and view all the answers

What does the NFT workflow begin with for an owner?

<p>Digitizing accurate file information (B)</p> Signup and view all the answers

Which platform allows users to buy and sell digital moments from basketball games?

<p>NBA Top Shot (D)</p> Signup and view all the answers

What is a significant aspect of NFT value mentioned in the content?

<p>Liquidity, allowing quick buying and selling (D)</p> Signup and view all the answers

What problem does a mutex address in smart contracts?

<p>It hinders an external call from re-entering its caller function. (A)</p> Signup and view all the answers

What is the primary purpose of incorporating an emergency stop functionality in a smart contract?

<p>To halt execution in case of a major bug or security issue. (D)</p> Signup and view all the answers

Which smart contract problem does the speed bump solution aim to solve?

<p>The simultaneous execution of sensitive tasks by many parties. (C)</p> Signup and view all the answers

What is the function of a rate limit in a smart contract?

<p>To control the frequency of task execution within a timeframe. (C)</p> Signup and view all the answers

Which of the following is a challenge associated with the use of non-fungible tokens (NFTs)?

<p>High gas fees and environmental impact. (B)</p> Signup and view all the answers

What can be a potential future application of NFTs as blockchain technology matures?

<p>In the realm of personal identities. (B)</p> Signup and view all the answers

Which smart contract design pattern addresses the need for improving security against unauthorized access?

<p>Security (D)</p> Signup and view all the answers

What can be a consequence of failing to implement patterns like mutex or emergency stop in a smart contract?

<p>Increased vulnerability to security breaches. (A)</p> Signup and view all the answers

What is the primary function of the gossip protocol in Hedera hashgraph?

<p>To ensure exponential spread of information (C)</p> Signup and view all the answers

How does Segregated Witness (SegWit) affect transaction size in blocks?

<p>It separates signatures from the main block, reducing transaction size (C)</p> Signup and view all the answers

What key benefit does cross-chain interoperability offer?

<p>The ability to move assets between different blockchain systems (B)</p> Signup and view all the answers

What was a significant consequence of the disagreements over SegWit upgrades?

<p>The hard fork resulting in Bitcoin Cash (D)</p> Signup and view all the answers

Which aspect do most Layer 1 blockchains lack in terms of cross-chain interoperability?

<p>Features that facilitate interoperability (B)</p> Signup and view all the answers

What does the 'Gossip about Gossip' consensus algorithm do?

<p>Facilitates communication about nodes and interactions within the network (C)</p> Signup and view all the answers

Which of the following correctly describes the two parts of a transaction in SegWit?

<p>Sender/receiver wallet addresses and witness data containing signatures (D)</p> Signup and view all the answers

What does cross-chain interoperability help to create in the overall blockchain ecosystem?

<p>A decentralized ecosystem with customizable services (D)</p> Signup and view all the answers

Flashcards

NFTs

Non-Fungible Tokens; unique digital assets on a blockchain.

CryptoPunks

A collection of 10,000 unique digital characters creating a popular NFT example.

NFT Workflow

A step-by-step process for creating, storing, and trading NFTs.

NFT Minting

The process of creating a new NFT on a blockchain.

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NFT Trading

Buying and selling NFTs.

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NFT Value

Factors affecting an NFT's worth, including liquidity, uniqueness, and social value.

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NFT Challenges

Problems including slow confirmation, high gas prices, data inaccessibility, and legal issues.

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NFT Ownership

Establishing and verifying who owns a digital asset.

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Re-entrancy attack

A security vulnerability where a contract calls another contract, which then re-enters the first contract and manipulates its state.

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Mutex

A mechanism used to prevent re-entrancy attacks by blocking external calls from re-entering a function.

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Emergency Stop

A mechanism that allows for stopping a contract's execution in case of a critical bug or security issue.

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Speed Bump

A technique to slow down sensitive tasks in a contract, reducing damage from fraudulent activities.

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Rate Limit

A technique to control the frequency of requests for a specific task to avoid overwhelming the contract's performance.

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Smart Contract Design Patterns

Proven, reusable structures used in smart contract development to improve security, maintainability, and efficiency.

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Blockchain Protocols Design Patterns

Common structures for the design of blockchain protocols supporting interoperability or other features.

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Non-Fungible Tokens (NFTs)

Unique tokens representing ownership of digital or physical assets, expected to expand into finance, identity, and virtual worlds.

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Off-Chain Data

Raw data often stored outside a blockchain network, with only metadata and hashes on the blockchain.

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IPFS

A peer-to-peer file storage system, often used with blockchains to store data.

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Public Blockchain

A blockchain where participation and validation are unrestricted, fostering transparency.

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Consortium Blockchain

A blockchain used by a specific group of authorized participants.

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Private Blockchain

A blockchain controlled by a single entity or a small group, often for internal use.

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Blockchain Scope

Describes the type of participants allowed to access and use the blockchain technology.

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Data Replication

Copying data to multiple locations for redundancy and fault tolerance.

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P2P Data Storage

Data storage using a peer-to-peer network instead of a central server.

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Private Blockchain

A blockchain designed for secure internal use within a single organization, prioritizing control and privacy over decentralization.

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Consortium Blockchain

A blockchain designed for collaboration between trusted partners, offering controlled participation.

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Public Blockchain

A blockchain that enables transparency and open participation, with transactions visible to everyone.

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GHOST

A consensus mechanism that allows concurrent block creation by prioritizing the heaviest observed subtree, improving throughput.

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BlockDAG

A data structure where blocks are arranged in a directed acyclic graph, enabling more concurrent and asynchronous transaction processing.

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Blockchain Trilemma

A fundamental challenge in blockchain design, balancing security, decentralization, and scalability.

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Block

A data structure containing a set of transactions grouped together.

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Throughput

The rate at which transactions are processed and confirmed on a blockchain.

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Block DAG

A directed acyclic graph (DAG) used in a blockchain, like Hedera Hashgraph, organizing transactional data in a non-linear fashion.

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Gossip Protocol (DAG)

A method for quickly spreading information across a network (in a DAG system) by having each node share it with a few other nodes, which re-share it, creating exponential spread.

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SegWit

Segregated Witness, a Bitcoin improvement that separates transaction signatures (witnesses) from the main block data.

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Cross-Chain Interoperability

The ability for different blockchain networks to exchange data and assets seamlessly.

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Layer 1

The foundational layer of a blockchain network, typically responsible for transaction validation and consensus.

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Layer 2

Further layers built on top of a Layer 1 blockchain, aiming to provide increased scalability and transaction speeds.

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Blockchain Protocol Design Patterns

Commonly used structures or strategies used in the design of blockchain protocols.

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Smart Contract Design Patterns

Pre-defined structures used in smart contract development to improve security, maintenance, and effectiveness.

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Sidechains

Separate networks with their own consensus mechanisms, security, and tokens, operating independently but potentially connected with other chains.

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Cross-Chain Interoperability

The ability for different blockchains to communicate and share data, enabling the exchange of assets and information between them.

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Oracles

Systems that feed external data into smart contracts, allowing for data synchronization across blockchains.

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Cross-Chain Bridges

Mechanisms enabling the transfer of assets between different blockchains.

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Decentralized Exchanges (DEXs)

Digital marketplaces facilitating the trading of cryptocurrencies and tokens without relying on centralized intermediaries.

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Study Notes

IS4302 Blockchain and Distributed Ledger Technologies - Week 8

  • Intended Learning Outcomes:
    • NFTs: Define, use cases, creation, trading
    • Smart Contract Security: Identify risks, implement security patterns
    • Blockchain Protocols: Compare models, understand consensus
    • Interoperability: Define, evaluate solutions, cross-chain challenges
    • Challenges: Recognize issues, plan for future developments

Overview

  • Non Fungible Tokens (NFTs)
  • Smart Contract Design Patterns (Security)
  • Blockchain Protocols Design Patterns
  • Interoperability

What Are NFTs?

  • Definition: Unique, non-interchangeable digital assets stored on a blockchain.
  • Each NFT has a unique identifier.
  • NFTs represent ownership of digital or physical items (art, music, collectibles, virtual real estate).
  • Key Blockchain: Ethereum blockchain using the ERC-721 standard.

Trading NFTs

  • Buying and Selling: NFTs are bought and sold on decentralized marketplaces (e.g., OpenSea, Rarible).
  • Ownership transfer is secured by the blockchain, ensuring a tamper-proof transaction history.
  • Smart Contracts in Trading: Smart contracts facilitate transactions by executing predefined terms (e.g., transfer of ownership and payment).
  • Royalties: Some NFTs are programmed to pay creators royalties every time the NFT is resold.

NFT Use Cases

  • Art and Collectibles: Digital artists sell unique works directly to buyers.
  • Gaming: Players own in-game assets and can trade or sell them.
  • Virtual Real Estate: Platforms allow users to buy, sell, and build on virtual land.
  • Music and Entertainment: Musicians release limited-edition albums or concert tickets as NFTs.

NFTs

  • CryptoPunks: One of the first NFTs on Ethereum, created more than 10,000 collectible punks.
  • CryptoKitties: Introduced gamification and hit the market in 2017.
  • NBA Top Shot: NFT trading platform for digital short videos of NBA moments.

An example workflow of NFT system

  • NFT Digitize: NFT owner checks and digitizes data.
  • NFT Store: Raw data stored in an external database, or on-chain.
  • NFT Sign: NFT owner signs a transaction and sends it to a smart contract.
  • NFT Mint&Trade: Smart contract receives the transaction; minting and trading begins.
  • NFT Confirm: Minting process completes when the transaction confirms.

Value of NFT

  • Liquidity
  • Uniqueness
  • Social value
  • Speculation

Challenges

  • Usability Challenges: Slow confirmation, high gas prices
  • Data inaccessibility: Cryptographic hash instead of a copy.
  • Legal pitfalls
  • Taxable Property issues
  • NFT Interoperability (cross-chain)

NFTs Overview

  • Unique Ownership: NFTs establish and verify ownership of digital assets.
  • Technological Foundation: Built on blockchain and smart contracts.
  • Challenges Ahead: High gas fees, environmental impact, and legal ambiguities need to be addressed.
  • Future Outlook: NFTs will likely expand into new industries (finance, identity, virtual worlds).

Overview

  • Non Fungible Tokens
  • Smart Contract Design Patterns (Security)
  • Blockchain Protocols Design Patterns
  • Interoperability

Mutex (Mutual exclusion)

  • Problem: Re-entrancy attack.
  • When a contract calls another, the called contract can re-enter and manipulate the caller's state
  • Solution: Utilize a mutex, preventing re-entry during critical segments.

Emergency Stop

  • Problem: No option to halt a deployed contract's execution.
  • Solutions: Implement emergency stop functionality that authenticated parties can trigger to disable sensitive functions.

Speed Bump

  • Problem: Simultaneous sensitive tasks by many parties can lead to contract downfall.
  • Solution: Prolong the completion of sensitive tasks to prevent fraudulent activities.

Rate limit

  • Problem: Request rush hinders contract performance
  • Solution: Regulate task execution frequency within a time period.

Balance Limit

  • Problem: Risk of contract compromise due to bugs.
  • Solution: Limit the maximum amount of funds at risk within a contract

Cross-Chain Interoperability

  • Importance: Wide proliferation of chains, desire to move assets, interface with web2 databases.
  • Benefits: Customizable Web3 services, allows "mix-and-match" features, creates a more decentralized ecosystem.
  • Layer-1 and Layer-2: Lack features for cross-chain interoperability.
  • Sidechains: Separate networks with their own consensus, security, and tokens.
  • Polkadot and Cosmos: Designed for cross-chain infrastructure solutions.
  • Oracles: Chainlink and API3 feed off-chain data to blockchain smart contracts to ensure common source of truth.
  • Bridges and Swaps: Enable ownership locking and minting on different chains.

Decentralized Exchanges (DEXs)

  • Platforms for trading cryptocurrencies not controlled by centralized entities.

Summary

  • Non-Fungible Tokens (NFTs): Unique digital assets, use cases in art, gaming, and virtual real estate.
  • Blockchain Protocols: Enhance performance and efficiency (GHOST, SegWit, BlockDAG).
  • Smart Contract Design: Focus on security, implement patterns to prevent attacks (Mutex, Emergency Stop).
  • Interoperability: Cross-chain solutions (Polkadot, Cosmos), linking different blockchains.

Data Structures

  • Blockchains, GHOST, BlockDAG, Segregated Witness (SegWit)

Blockchain Scope

  • Public: Free entry
  • Consortium: Designated validators, used across organizations.
  • Private: One designated validator

Blockchain- Original Design

  • Consensus guaranteed by the longest chain heuristic approach.

Blockchain Trilemma

  • Decentralization: The system runs with participants having limited access to resources (e.g., regular laptops).
  • Scalability: The system that can handle a large volume of transactions.
  • Security: Security against attackers using limited resources.

Greedy Heaviest-Observed Subtree (GHOST)

  • Concurrent work allowing for shorter inter-block times.
  • Blocks that refer to uncle blocks.
  • The heaviest branch considered valid.

Block Directed Acyclic Graph (DAG)

  • Non-conflicting transactions from uncle blocks are incorporated in the main chain.
  • Selection rules can choose from heaviest subtree or longest chain.

Segregated Witness (SegWit)

  • Separates signatures (witnesses) from the input fields of blocks.
  • Reduced transaction size leading to more transactions per block.
  • First implemented in Litecoin, then Bitcoin.

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IS4302 Blockchain and Distributed Ledger Technologies Week 8 Fall 2024 PDF

Description

This quiz focuses on Week 8 of the IS4302 Blockchain and Distributed Ledger Technologies course. It covers essential topics such as NFTs, smart contract security, blockchain protocols, and interoperability. Test your knowledge on the key concepts, use cases, and challenges associated with these technologies.

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