Cryptocurrency Blockchain Technology Fundamentals 3 — Questions and Answers
Question 1: What distinguishes a permissioned blockchain from a public one?
- It uses a different hashing algorithm
- Participation requires authorization from a governing entity (Correct answer)
- It has no transaction fees
- All data is stored off-chain
Correct answer: Participation requires authorization from a governing entity
Permissioned (private or consortium) blockchains restrict who can read, write, or validate, making them suitable for enterprise use cases requiring access control.
Question 2: What is 'block finality' in blockchain systems?
- The maximum number of transactions per block
- The point at which a block is considered irreversible (Correct answer)
- The time taken to broadcast a block to all nodes
- The difficulty adjustment interval
Correct answer: The point at which a block is considered irreversible
Finality refers to the guarantee that a confirmed block will not be reverted; some blockchains offer probabilistic finality (Bitcoin) while others offer absolute finality (certain PoS chains).
Question 3: What is a 'genesis block'?
- The block with the highest transaction volume
- The very first block of a blockchain, with no predecessor (Correct answer)
- The block that triggers a halving event
- The block containing the initial coin supply burn
Correct answer: The very first block of a blockchain, with no predecessor
The genesis block is block zero (or block one) of a blockchain, hardcoded into the software, and has no previous block hash to reference.
Question 4: How does hashing ensure data integrity in a blockchain?
- By encrypting data so only miners can read it
- By producing a fixed-length fingerprint that changes if the input changes at all (Correct answer)
- By compressing transactions to save storage space
- By assigning sequential IDs to all transactions
Correct answer: By producing a fixed-length fingerprint that changes if the input changes at all
Cryptographic hash functions are deterministic and avalanche-sensitive, so even a single-bit change in input produces a completely different output, making tampering immediately detectable.
Question 5: What does 'transaction throughput' (TPS) measure in a blockchain?
- The fee paid per transaction
- The number of transactions the network can confirm per second (Correct answer)
- The size of each block in bytes
- The number of active wallet addresses
Correct answer: The number of transactions the network can confirm per second
TPS (transactions per second) is a key scalability metric; Bitcoin handles ~7 TPS while Visa processes thousands, driving research into Layer 2 and other scaling solutions.
Question 6: What is a 'light node' (SPV client) in Bitcoin?
- A node that only mines small blocks
- A client that downloads only block headers to verify payments without the full chain (Correct answer)
- A node that stores only the UTXO set
- A node dedicated to relaying transactions without validating them
Correct answer: A client that downloads only block headers to verify payments without the full chain
Simplified Payment Verification clients download block headers and use Merkle proofs to confirm that a transaction is included in a block without storing the entire blockchain.
Question 7: What is 'chain reorganization' (reorg) in a blockchain?
- A scheduled upgrade that reorders node priorities
- When the network switches to a longer competing chain, reversing recent blocks (Correct answer)
- A process to compact old blockchain data
- A governance vote to change block ordering rules
Correct answer: When the network switches to a longer competing chain, reversing recent blocks
A reorg occurs when nodes discover a longer valid chain and replace their current tip, rolling back recent transactions — deeper reorgs are exponentially less likely over time.
Cryptocurrency Blockchain Technology Fundamentals 3
What distinguishes a permissioned blockchain from a public one?