Public blockchains most often use________ as a consensus mechanism.
C
Explanation:
Public blockchains most commonly use Proof of Work (PoW) as their consensus mechanism,
especially in well-established networks such as Bitcoin and, until recently, Ethereum. PoW is a
protocol that relies on network participants (miners) solving complex mathematical problems to
validate and add transactions to the blockchain. This process ensures the integrity and security of the
network, as it requires substantial computational power and resources, making it difficult for any
single entity to control the blockchain.
Key Details:
Proof of Work (PoW): PoW, used primarily by Bitcoin, operates by having participants (often referred
to as miners) compete to solve cryptographic puzzles. The first to solve the puzzle adds the next
block of transactions to the blockchain and is rewarded with newly minted coins. This system is
energy-intensive but is widely recognized for its security and resistance to tampering.
Transition in Other Networks: While Ethereum initially used PoW, it transitioned to Proof of Stake
(PoS) in 2022 with Ethereum 2.0, due to PoS's lower energy requirements and increased scalability.
However, Bitcoin, the most prominent public blockchain, still relies on PoW.
Other Consensus Mechanisms: Alternatives such as Proof of Stake (PoS) and Proof of Burn (PoB) are
used by other blockchain networks that aim for different trade-offs in terms of energy efficiency,
scalability, and security. Proof of Elapsed Time (PoET) is another mechanism mostly associated with
permissioned (private) blockchains rather than public blockchains.
Why PoW for Public Blockchains?: Public blockchains prioritize decentralization and security. PoW
provides a robust way to achieve this, despite its high energy consumption. Its high level of security
and historical success in Bitcoin’s network often make it the go-to choice for public blockchains.
In summary, the dominance of PoW in public blockchains is due to its established security and
proven track record, although PoS and other mechanisms are increasingly gaining popularity for their
efficiency in newer blockchain projects.
Is a Microsoft blockchain development platform that allows the creation of custom private
blockchains.
C
Explanation:
Microsoft Azure is a blockchain development platform that enables the creation of custom private
blockchains. Azure Blockchain Service provides tools and services that allow organizations to set up
and manage consortium blockchain networks, customize smart contracts, and create tailored
blockchain applications. Azure supports multiple blockchain frameworks, including Ethereum and
Hyperledger Fabric, making it versatile for both private and public network needs.
Key Details:
Azure Blockchain Service: This service facilitates the deployment of managed blockchain networks on
the cloud, leveraging Azure's infrastructure to deliver scalability, security, and reliability for private
and consortium blockchain applications.
Private Blockchain Capabilities: As a private blockchain service, Azure allows businesses to operate
their blockchain in a controlled, permissioned environment. This offers greater control over data and
participants, making it ideal for enterprise use cases like supply chain management, finance, and
legal contracts.
Blockchain Framework Compatibility: Although Azure supports a variety of blockchain protocols, it
primarily focuses on private blockchain deployments, allowing for detailed control over network
participants and data visibility.
In summary, Microsoft Azure stands out as a flexible and comprehensive platform for private
blockchain development, catering to enterprises with tailored solutions and extensive cloud-based
services.
Proof of work algorithms are best described as being used for what?
B
Explanation:
Proof of Work (PoW) algorithms are primarily used to demonstrate that sufficient computational
resources have been expended by a participant to validate transactions and add them to the
blockchain. In PoW, miners compete to solve a cryptographic puzzle, which requires significant
computational power. This effort helps secure the network by making it prohibitively expensive for
any individual or group to alter the blockchain's history.
Key Details:
Mechanism of PoW: The essence of PoW is to prove that a certain amount of computational work
has been performed. This “work” is measured by the effort miners invest in solving the cryptographic
puzzle. The process requires miners to find a nonce that, when hashed with the block’s data, results
in a hash that meets the network's difficulty requirements.
Security and Integrity: By proving computational work, PoW ensures that miners cannot simply
fabricate or alter transactions without a significant investment of resources. This mechanism deters
attacks and makes blockchain networks resistant to tampering and double-spending.
Association with Bitcoin Mining: Although PoW is often associated with Bitcoin mining (as miners
expend computational resources to validate and record transactions), its broader purpose is to
establish a cost for participation in the network, ensuring that all entries to the blockchain are
trustworthy and secure.
Therefore, PoW is best described as a mechanism for proving that adequate computational resources
have been expended, aligning with the correct answer B.
________is used to split up the tasks into multiple chunks that are then processed by multiple nodes.
A
Explanation:
Sharding is a scalability technique that splits tasks or data into smaller, more manageable pieces
called "shards." These shards are then processed in parallel by multiple nodes in a network. By
dividing the workload, sharding can significantly enhance the efficiency and speed of blockchain
networks, which is especially beneficial for handling large transaction volumes and complex
computations.
Key Details:
Purpose of Sharding: The main goal of sharding is to address blockchain scalability issues. By
enabling the network to process transactions and data in parallel, it reduces the load on individual
nodes, thus increasing the overall throughput of the blockchain.
How Sharding Works: In a sharded blockchain, each node only needs to process a portion of the total
data rather than every single transaction on the network. Each shard is responsible for a subset of
data and transactions, and only nodes within a particular shard need to validate its transactions.
Relevance in Blockchain: Sharding is crucial in large-scale blockchain networks like Ethereum, where
high transaction volumes can lead to congestion. Ethereum 2.0, for example, incorporates sharding
as a core feature to improve its scalability and transaction processing capacity.
Sharding is, therefore, the correct answer, as it directly refers to the method of dividing tasks for
parallel processing in a distributed environment.
These wallets store keys in a tree structure derived from a seed.
B
Explanation:
Hierarchical Deterministic (HD) Wallets are wallets that generate private and public keys in a tree
structure, starting from a single seed phrase. This seed phrase can generate multiple key pairs,
allowing users to back up and recover all their wallet addresses using one phrase, which enhances
security and convenience.
Key Details:
Tree Structure: HD wallets use a root seed to derive an entire hierarchy of keys. Each branch in the
tree can create new sub-branches, generating separate addresses for different transactions without
reusing them, which provides better privacy.
Seed-Based Recovery: Users can restore all wallet addresses with the original seed phrase, making
HD wallets more secure and easy to back up compared to non-deterministic wallets, which would
require individual backups for each key.
Compatibility with Blockchain Standards: HD wallets adhere to the BIP32 and BIP44 standards, which
outline the derivation paths and formats used by these wallets. This compatibility allows for
interoperability among different wallet providers.
In conclusion, Hierarchical Deterministic Wallets (answer B) best describes wallets that store keys in
a tree structure derived from a seed.
Which of the following are likely use cases for blockchain in the energy industry? (Select two.)
B, D
Explanation:
Blockchain technology has significant potential in the energy industry, particularly in energy trading
and smart power grids. By providing a transparent, decentralized, and secure platform for
transactions, blockchain can facilitate peer-to-peer energy trading and improve the efficiency and
reliability of smart grids.
Key Details:
Energy Trading: Blockchain enables peer-to-peer energy trading where individuals and companies
can buy and sell excess energy (such as solar or wind power) directly to each other. This
decentralized model reduces the need for intermediaries and allows consumers to benefit from
direct energy sales and purchases.
Smart Power Grids: Blockchain can enhance smart grid systems by enabling real-time data sharing
and automated decision-making. With blockchain, smart grids can securely record and share data
related to energy production, consumption, and storage, thereby improving grid management,
reducing waste, and optimizing energy distribution.
Enhanced Transparency and Security: By recording all transactions in an immutable ledger,
blockchain ensures transparency and security, reducing the risks of fraud and discrepancies in the
energy market. This is especially beneficial in energy trading where trust and accurate record-
keeping are essential.
Thus, Energy trading (B) and Smart power grids (D) are the most likely use cases for blockchain in the
energy industry.
_______uses a Trusted Execution environment (TEE) to provide randomness and safety in the leader
election process via a guaranteed wait time.
A
Explanation:
Proof of Elapsed Time (PoET) is a consensus mechanism that uses a Trusted Execution Environment
(TEE) to ensure randomness and safety in the leader election process by enforcing a guaranteed wait
time. Developed by Intel, PoET is particularly used in permissioned blockchain networks where a TEE
can securely run code to determine which node is elected to propose the next block. This mechanism
is efficient in terms of energy consumption and provides a fair method for selecting a leader without
requiring intensive computational power.
Key Details:
Role of TEE in PoET: The TEE ensures that nodes wait for a random period before being eligible to
propose a new block. This waiting period is verified by the TEE, which acts as a trusted third party to
confirm that nodes have adhered to the assigned wait time.
Randomness and Security: PoET provides randomness in the leader selection process, reducing the
chances of any node gaining an unfair advantage. It also promotes security by leveraging the TEE,
which is designed to prevent tampering with the waiting time calculations.
Use Cases: PoET is mainly used in permissioned blockchain environments like Hyperledger Sawtooth,
where nodes are pre-approved, and there is a need for a scalable yet secure consensus mechanism.
In summary, PoET is the correct answer as it directly refers to a consensus mechanism that utilizes a
Trusted Execution Environment for leader election.
A________in a new chain and requires clients to upgrade in order to participate on the new
blockchain.
A
Explanation:
A hard fork occurs when there is a fundamental change in a blockchain’s protocol, resulting in the
creation of a new chain that is incompatible with the previous one. After a hard fork, nodes must
upgrade to the new version of the blockchain’s software to continue participating in the network. A
hard fork can be used to implement new features, fix security issues, or change core aspects of the
blockchain.
Key Details:
Differences from Soft Forks: Unlike a soft fork, which is backward-compatible and allows nodes on
the previous version to still participate, a hard fork splits the blockchain into two distinct paths, with
the upgraded path requiring new software.
Examples: Notable hard forks include Bitcoin Cash from Bitcoin and Ethereum Classic from Ethereum.
These forks occurred due to disagreements within the community on how to handle certain protocol
changes, leading to the creation of separate blockchains.
Upgrade Requirements: Participants on the blockchain who wish to continue on the new chain after
a hard fork must update their software. Those who do not upgrade remain on the original chain,
which continues as a separate, incompatible blockchain.
Thus, the correct answer is Hard fork (A), as it directly refers to a blockchain split that requires client
upgrades for participation.
______is a computer program that runs stop a blockchain and embedded within it are governance
and business logic rules
A
Explanation:
Decentralized Applications (Dapps) are applications that run on a blockchain network and include
embedded governance and business logic rules. Unlike traditional applications, Dapps are
decentralized, meaning they operate on a peer-to-peer network rather than a centralized server,
leveraging smart contracts to automatically enforce rules and protocols without intermediaries.
Key Details:
Characteristics of Dapps: Dapps are open-source, operate autonomously, and store data on a
blockchain. They utilize smart contracts to handle various functions, from transaction processing to
enforcing governance rules and executing business logic.
Smart Contracts: The embedded rules within Dapps are typically coded as smart contracts, which are
self-executing contracts with the terms of the agreement directly written into lines of code. This
ensures that all transactions and operations within the Dapp are transparent, immutable, and
automatically enforced.
Use Cases: Dapps are commonly found in areas such as decentralized finance (DeFi), gaming, supply
chain management, and social media, offering users more control and transparency compared to
traditional applications.
In conclusion, Dapps (A) is the correct answer as it refers to computer programs running on a
blockchain with embedded governance and business logic rules.
What is a DEX
C
Explanation:
A Decentralized Exchange (DEX) is a platform that allows users to trade cryptocurrencies directly with
one another without the need for a central intermediary or custodian. On a DEX, trades are
facilitated using smart contracts on a blockchain, which automate transactions and ensure
transparency. This decentralized model allows for peer-to-peer trading, often providing users with
greater privacy and control over their funds compared to centralized exchanges.
Key Details:
Functionality of DEXs: DEXs enable users to connect their wallets and trade assets directly from their
accounts. There is no central authority controlling the funds, reducing the risk of hacks and giving
users full control over their private keys.
Examples of DEXs: Popular DEXs include Uniswap, SushiSwap, and PancakeSwap, which are
commonly built on blockchain networks like Ethereum and Binance Smart Chain. These platforms
operate through automated market makers (AMMs) or order book systems, which facilitate trading
without centralized management.
Comparison with Centralized Exchanges (CEXs): Unlike centralized exchanges, which act as
intermediaries and hold user funds, DEXs do not hold custody of funds. This reduces the risk of theft
and enables users to trade directly from their wallets.
Therefore, the correct answer is C. A decentralized exchange that allows users to exchange
cryptocurrency directly.
Self-executing computer programs which facilitate transaction automation and eliminates the need
for intermediaries are called what?
D
Explanation:
Smart Contracts are self-executing computer programs that automatically enforce, verify, and
facilitate the terms of a contract when certain conditions are met. These programs run on blockchain
networks and eliminate the need for intermediaries by automating transactions based on predefined
rules coded into the contract.
Key Details:
Automation and Trust: Smart contracts are crucial in blockchain technology because they enable
trustless transactions, meaning parties can transact directly without relying on intermediaries. The
code controls the execution, and transactions are transparent and irreversible.
Use Cases: Smart contracts are foundational to decentralized finance (DeFi) applications, supply
chain management, digital identity, and more. They facilitate various operations such as lending,
borrowing, insurance, and automated asset transfers.
Example in Ethereum: Ethereum popularized smart contracts by providing a platform with Turing-
complete scripting capabilities. This allowed developers to create sophisticated decentralized
applications that execute on the blockchain.
In conclusion, D. Smart contracts is the correct answer as it refers to the technology that automates
transactions and eliminates the need for intermediaries.
Which of the following is a language for working with Ethereum?
C
Explanation:
Solidity is the primary programming language used for developing smart contracts on the Ethereum
blockchain. It is a statically typed, high-level language similar to JavaScript and C++, and it is
specifically designed for creating contracts that run on the Ethereum Virtual Machine (EVM).
Key Details:
Purpose of Solidity: Solidity was created by the Ethereum team to enable the development of smart
contracts that automate the execution of blockchain-based applications. Its syntax is designed to be
familiar to developers experienced in other programming languages, which helps in onboarding and
learning.
Compatibility and Flexibility: As a Turing-complete language, Solidity allows for the development of
complex smart contracts and decentralized applications (DApps) with conditional logic, loops, and
more. It is widely used in the DeFi space and beyond.
Ethereum Test Networks: Other options listed, such as Rinkeby and Kovan, refer to Ethereum test
networks where developers test smart contracts, but they are not languages themselves. Mist is an
Ethereum wallet interface, not a programming language.
Thus, C. Solidity is the correct answer, as it is the language specifically designed for working with
Ethereum smart contracts.
A Type II DAPP is categorized by its______
B
Explanation:
A Type II DApp is a decentralized application that uses both the blockchain and protocol of a Type I
DApp. Type I DApps are the foundational blockchain-based platforms, such as Ethereum, that operate
with their own blockchain. Type II DApps build on these platforms, using the existing blockchain and
protocol, but offering specific functionalities or services.
Key Details:
Type I DApps: These are fundamental blockchain platforms, like Bitcoin or Ethereum, which have
their own blockchain and provide a foundation for other applications.
Characteristics of Type II DApps: Type II DApps leverage the infrastructure of Type I DApps but add
additional functionality through smart contracts or protocols. For example, protocols such as ERC-20
tokens or ERC-721 NFTs are built on Ethereum and utilize Ethereum's underlying blockchain and
consensus protocol.
Integration: By utilizing both the blockchain and protocol of a Type I DApp, Type II DApps inherit the
security, decentralization, and features of the underlying Type I platform, which simplifies their
development and ensures compatibility.
In summary, B. Using the blockchain and protocol of a type I accurately describes the categorization
of Type II DApps.
_________change the blockchain layout from a linearly sequential model.
D
Explanation:
Tree Chains modify the standard blockchain structure from a linear sequence to a tree-like structure,
where blocks can have multiple branches instead of forming a single sequential chain. This structure
can improve scalability and enable parallel processing, as multiple chains can be validated
simultaneously.
Key Details:
Tree Structure: In tree chains, blocks can have multiple child blocks, which allows transactions to be
processed across several branches concurrently. This reduces bottlenecks associated with linear
block validation and enhances throughput.
Benefits Over Linear Chains: Traditional blockchain models process blocks in a strict sequence. Tree
chains allow for more flexibility and higher transaction throughput, as multiple blocks can be
validated simultaneously across different branches.
Use Cases: This structure is advantageous for complex applications that require parallel transaction
processing, such as large-scale blockchain networks or systems needing high transaction speeds.
Thus, D. Tree chains is the correct answer, as it refers to the blockchain model that diverges from a
linear structure.
According to a study be Deloitte, which of the following are benefits of blockchain for the insurance
industry (pick two)?
A, D
Explanation:
According to studies conducted by Deloitte and other industry research, blockchain offers several
benefits for the insurance industry, particularly in more efficient claims processing and lower costs.
Blockchain’s capabilities in data immutability, transparency, and automation play key roles in
streamlining insurance processes and reducing operational expenses.
Key Details:
Efficient Claims Processing: Blockchain enables quicker verification and processing of claims by
automating workflows through smart contracts. This reduces paperwork, minimizes errors, and
speeds up the claims process, improving customer satisfaction.
Lower Costs: By reducing intermediaries and leveraging automation, blockchain lowers
administrative costs. It minimizes the need for manual verification and fraud detection, which
traditionally consume significant resources in the insurance industry.
Transparency and Fraud Reduction: Blockchain provides an immutable and transparent record of all
transactions. This helps prevent fraud, as all stakeholders have access to the same data, reducing
discrepancies and the need for extensive audits.
In conclusion, A. More efficient claims processing and D. Lower costs are the correct answers, as
these are key benefits of blockchain for the insurance industry identified in Deloitte’s research.