Cryptocurrency Consensus Mechanisms and Mining 2 — Questions and Answers
Question 1: What is a '51% attack' in the context of Proof of Work blockchains?
- When a miner controls more than half the network's hash rate and can rewrite recent transactions (Correct answer)
- When 51 different mining pools coordinate to set transaction fees
- When more than half of all coins are held by a single wallet
- When 51% of nodes go offline simultaneously
Correct answer: When a miner controls more than half the network's hash rate and can rewrite recent transactions
If a single entity controls >50% of hash rate, they can mine blocks faster than the rest of the network combined, enabling double-spend attacks.
Question 2: In Proof of Stake, what is 'slashing'?
- A penalty that destroys a portion of a validator's staked funds for malicious behavior (Correct answer)
- The process of cutting transaction fees in half during network congestion
- Reducing block rewards after each halving event
- Removing inactive validators from the validator set
Correct answer: A penalty that destroys a portion of a validator's staked funds for malicious behavior
Slashing is a punitive mechanism where validators lose part of their stake if they act dishonestly, such as double-signing blocks.
Question 3: What distinguishes Delegated Proof of Stake (DPoS) from standard Proof of Stake?
- Token holders vote for a limited set of delegates who validate transactions on their behalf (Correct answer)
- Validators must delegate their stake to mining pools to participate
- Only the largest stakers can delegate their rewards to smaller holders
- DPoS requires validators to also perform Proof of Work
Correct answer: Token holders vote for a limited set of delegates who validate transactions on their behalf
In DPoS, token holders vote for a small group of elected delegates (e.g., 21 in EOS) who produce blocks, making consensus more efficient.
Question 4: What is the 'nothing-at-stake' problem in early Proof of Stake designs?
- Validators could cheaply vote on multiple competing chain forks without any cost, undermining consensus (Correct answer)
- New validators with no stake could still participate in block production
- Staking provided no economic incentive for honest behavior
- Validators who lost their stake had nothing left to lose
Correct answer: Validators could cheaply vote on multiple competing chain forks without any cost, undermining consensus
Unlike PoW where mining one fork costs real energy, early PoS validators could sign every fork for free, making double-spends easier.
Question 5: Which consensus algorithm does Ripple (XRP) use?
- Ripple Protocol Consensus Algorithm (RPCA) with a Unique Node List (Correct answer)
- Proof of Work with SHA-256
- Delegated Proof of Stake
- Proof of Authority
Correct answer: Ripple Protocol Consensus Algorithm (RPCA) with a Unique Node List
Ripple uses its own federated consensus where trusted validator nodes on a Unique Node List (UNL) agree on transaction ordering.
Question 6: What is 'mining difficulty adjustment' in Bitcoin and how often does it occur?
- An automatic recalibration of the target hash every 2016 blocks (~2 weeks) to maintain a ~10-minute block time (Correct answer)
- A manual update by core developers every month to control inflation
- A change in the SHA-256 algorithm applied after each halving
- A reduction in mining rewards adjusted daily based on network hash rate
Correct answer: An automatic recalibration of the target hash every 2016 blocks (~2 weeks) to maintain a ~10-minute block time
Bitcoin's protocol adjusts the proof-of-work target every 2016 blocks so that blocks continue to be found approximately every 10 minutes regardless of total hash rate.
Question 7: What is 'uncle blocks' (ommers) in Ethereum's original PoW system?
- Valid blocks that were mined simultaneously with the main chain block but not included in the canonical chain (Correct answer)
- Blocks produced by mining pools that shared rewards with solo miners
- Orphaned blocks from failed 51% attacks
- Blocks containing only uncle reward transactions
Correct answer: Valid blocks that were mined simultaneously with the main chain block but not included in the canonical chain
Uncle blocks are valid PoW solutions found at the same time as a canonical block; Ethereum rewarded miners for these to reduce centralization pressure from fast block times.
Cryptocurrency Consensus Mechanisms and Mining 2
What is a '51% attack' in the context of Proof of Work blockchains?