Blockchain Interview Questions with Answers | Blockchain Works

Blockchain jobs are amongst the most lucrative career opportunities in today’s job market. Almost every forward-looking company in all sorts of industries is implementing blockchain processes in their business modules. They are either doing this through in-house talent or in conjunction with specialist blockchain companies who provide tech consultancy and solutions. This has created a demand for highly skilled professionals who can work on complex blockchain solutions and have a multi-disciplinary skill-set.

Such requirements create a talent gap in the industry. The skills and knowledge possessed by professionals may not live up to the industry standards. To make sure that the right candidate gets the opportunity, recruiters adhere to an interview process that tests an individual’s knowledge around blockchain skills and ideology.

If you are a software developer, marketing professional, or someone who is preparing to get a job at a blockchain company then you must get ready to answer some frequently asked questions for those job interviews.

While questions like "what is blockchain and what are its features?" are the obvious conversation starters, other equally important questions consistently rank as top interview questions. To know the correct way to answer these questions, follow along.

What is Blockchain Technology?

Blockchain is a decentralized digital ledger that can be used to record transactions across many computers so that the record cannot be altered retroactively without doing substantial damage to the network. It maintains a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, timestamp, and transaction data.

Why do you think Blockchain networks are trustworthy? How would you explain it to a layman?

The trustworthiness of blockchain networks is quite ironic because blockchain works in a way that adheres to a trustless process. The need to trust in a process or mechanism is based on the absence of absolute transparency and the presence of an intermediary. Blockchain as a technology eradicates the need for an intermediary through a decentralized network that verifies changes on the ‘Block’ with a consensus algorithm. In such a scenario, there is utmost transparency which makes things work on a blockchain network in a safe and trustless manner. The fact that blockchain networks and databases are not prone to corruption and fraud, makes them highly trustworthy.

What are the different types of blockchain networks? Where are they used?

There are mainly three types of blockchain networks, i.e, public, private, and consortium blockchains.

• Public blockchains are accessible to anyone on the internet. Any user can verify transactions and add blocks to these networks. Cryptocurrencies, healthcare records, and government use public blockchain networks.

• Private blockchains are visible to people but can only be verified by those are specified by the owners of that blockchain. Organizations and companies use these blockchain ledgers and they even decide who can read the ledger, and only some of those audience are authorized to verify the changes in it.

• Consortium blockchain ledgers are distributed between a network of organizations and only they can access the ledger. Only pre-selected nodes (or companies/representatives) are allowed to take part in the consensus process who decide on the behalf of the whole network. Unlike private blockchain ledgers, no single organization has the ownership status of the network.

What are the various cryptographic algorithms used in the industry?

There are around five most used algorithms in the blockchain industry. The most widely used is the SHA-256. Others are:

• Triple DES
• Ethhash
• RSA
• Blowfish

What is a smart contract?

A smart contract is a program based on the Ethereum platform that executes automatically when a set of predefined terms, between the peers, are met.

Smart contracts are used in transportation, insurance, copyright, employment contract, etc.

What is the difference between Bitcoin and Ethereum?

The main difference between both is that Bitcoin is just a cryptocurrency, whereas Ethereum is a platform that allows other businesses to develop their applications. The Ethereum network has an in-built currency that is called Ether.

As a cryptocurrency, Ethereum is certainly faster than Bitcoin because it settles transactions within seconds.

What is Solidity and what is the first thing that is specified in a Solidity file?

Solidity is an object-oriented programming language that is used to write smart contracts. One must specify the Solidity version number and code version number at the beginning. It eliminates compatibility errors while compiling the code with another version.

What is the difference between proof of stake and proof of work?

Proof of Work (PoW) is the method of verifying a transaction by solving a mathematical puzzle. This process is also called mining and is an intense computational process that takes up a lot of power. Proof of stake (PoS) is an alternative where the blockchain goes for distributed consensus. The probability of mining depends upon the miner’s stake in the network. Whereas in PoW, the probability depends upon the computational work. PoS eliminates the heavy electrical power used up to mine blocks.

What are the attack risks in a blockchain network?

So called 51% attacks, are the most evident form of network attack where an individual or a group owns the majority mining power. This allows them to prevent transactions from being confirmed. Mostly, small cryptocurrencies are vulnerable to such attacks, and Proof of Stake is a robust solution to prevent such them.

How do you explain blockchain technology to someone who doesn’t know it?

Most people hear blockchain and immediately think of cryptocurrency. While Bitcoin is built on blockchain technology, it’s far from being its only use case. Blockchain is a distributed ledger that can be used to store any type of data. It’s secure by design, meaning it has no central authority point of failure or control. This makes it highly resistant to outages and tampering.

What do you mean by blocks in Blockchain Technology?

Within each block, there are valid transactions. These blocks are chained together and stored in an ever-growing list called a blockchain. That’s why they’re also known as chains of blocks or distributed ledgers. Any alteration of the data in any given block requires an unanimous agreement from all computers in the network.

Which Blockchain platform is the most popular one?

Ethereum is the most popular Blackchain platform. However, there are many more platforms like NEO and Hyperledger Fabric. It all depends on what kind of business you want to set up and what your end goal is. Here is a list of top blockchain platforms:

• Ethereum.
• Hyperledger Fabric.
• R3 Corda
• Ripple.
• Quorum

Explain how blockchain technology works?

The blockchain is a public ledger of all cryptocurrency transactions. It’s constantly growing as completed blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the network) gets a copy of the blockchain, which gets downloaded automatically upon joining the network. The blockchain has complete information about the addresses and their balances right from the genesis block to the latest block.

How can blockchain be trusted?

With blockchain technology, there is no way to alter any transaction that has ever occurred. This creates a system where people can trust one another and do business.

What is cryptography?

Cryptography is a method of storing and sending data so that only those for whom it is intended can read and process it.

What is the role of cryptography in blockchain?

Cryptography plays a key role in blockchain technology. For example, cryptocurrencies like Bitcoin rely on cryptography for their security and to verify transactions.

What are Public Key and Private Key in blockchain technology?

In public-key cryptography, a user generates two mathematically linked keys: a public key and a private key. The public key is available to everyone, whereas only its owner has access to the private key.

Explain the various types of blockchain technology?

There are 3 types of blockchain technology:

• Public Blockchain
• Private Blockchain
• Consortium Blockchain

Describe the real-life use case of blockchain technology?

One example of a real-life use case of blockchain technology is bitcoin, which is used as a form of currency to buy and sell products online.

What is a Merkle tree and why are these important in blockchain?

A Merkle tree is a data structure used to efficiently store and verify data. Each node in a Merkle tree contains information about some portion of data, and each node is hashed together with its children nodes to form a hash that represents all of its information.

How Machine Learning can be used with blockchain development?

The integration of machine learning in blockchain development helps to enhance the security of the distributed ledger of the blockchain.

How is a blockchain distribution ledger different from a traditional ledger?

In a Blockchain ledger, the data on a blockchain exists as shared and continually reconciled records of transactions, meaning that they are both transparent and accessible to all parties involved. A traditional ledger is a list of transactions that have taken place over a period of time, generally referred to as an accounting period.

What is the difference between a private blockchain and a public blockchain?

The biggest difference between a private blockchain and a public blockchain is that while anyone can join and participate in a public blockchain, only those granted permission can access a private blockchain.

What keeps your transaction data safe in blockchain?

The blockchain is a decentralized, public ledger. This ledger provides a way for people to verify transactions without having to trust each other or any single authority.

Why is Blockchain the next big thing for Data Science?

Although blockchain technology is still in its infancy, it will grow to impact every industry on a massive scale. Many data scientists are excited to explore blockchain technology because it allows a data scientist to learn data more efficiently.

Describe smart contracts.

Smart contracts are self-executing contractual states, stored on an immutable ledger, which nobody controls and thus everyone can trust.

Where do nodes run a smart contract code?

A node on a blockchain network is essentially like a server that’s running a smart contract code. For example, Bitcoin has its own blockchain network, and every single node within that network runs its own version of nodes.

What is a 51% attack?

A 51% attack happens when an organization that controls more than 50% of a blockchain network's processing computing power attacks and takes control of a blockchain network. This would allow them to reverse transactions, prevent new transactions from being confirmed, and prevent other miners from mining valid blocks.

How do you deploy a file containing multiple contacts?

You can send a signed file containing multiple contacts using JSON Web Key (JWK) data. You can use multiple contact objects to send multiple contacts in a single message.

What is Secret Sharing?

In cryptography, secret sharing is a method for distributing a secret amongst a group of people such that any subset of the group, or even every single person in it, can reconstruct the secret.

What is mining in blockchain?

Mining is a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain network. This process also involves creating new blocks on the blockchain by solving complex mathematical algorithms.

How do off-chain transactions differ from on-chain transactions?

Off-chain transactions have much lower costs but they also require trust in a third party, while on-chain transactions are fully transparent and publicly auditable.

Are there any network-specific conditions for using blockchain technology in an organization?

The network-specific conditions for using blockchain technology depend on which network you are working within.

What is a security policy?

Blockchain technology has a huge range of applications and is used in many different industries. However, blockchain isn’t necessarily secure by default. In fact, it can be quite vulnerable to security threats if you don’t know how to protect it properly. That’s why it’s important to have a clear understanding of blockchain security policy before using any type of blockchain solution.

Why is blind signature useful and what is its significance?

In cryptography, a blind signature is a form of digital signature that allows someone to sign a document without revealing its content. Blind signatures can be useful in electronic voting systems, where voters can sign votes while keeping their choices private.

What do you mean by Ethereum Network?

The Ethereum network is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference.

List down the Ethereum Network you are familiar with?

There are three types of Ethereum networks such as:

• Live Network
• Test Network
• Private Network

What are the applications of smart contracts?

Smart contracts are used to provide a basis for trust between parties who don’t know each other and may not even trust one another. The applications of smart contracts are endless, but here are some examples: real estate, supply chain management, financial services (banking), insurance claims processing, and healthcare.

Which cryptographic algorithms are most widely used?

The most widely used cryptographic algorithms are RSA, ECC, and AES. They’re based on mathematical problems that take a lot of time to solve.

What is an RSA algorithm?

An RSA algorithm is public-key cryptography that is used to encrypt and decrypt data. Invented by Ron Rivest, Adi Shamir, and Leonard Adleman in 1977.

How will you handle risk management when it comes to securing the transaction records?

Blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. This creates an immutable audit trail that makes it possible to trace information back to its origin.

What is the difference between a centralized, decentralized network or a distributed ledger?

There are three main types of networks: centralized, decentralized, and distributed. In a centralized network, there is a single point of authority (or multiple points if replication is involved). In a decentralized network, no one entity has control over data or transactions. A distribution ledger contains elements of both centralization and decentralization.

Explain the differences between ScriptPubKey and P2SH addresses?

The differences between ScriptPubKey and P2SH addresses have to do with how a transaction is encoded. It is also called looking script that helps to find transaction output. On the other hand, P2SH stands for pay to a script hash. It is a type of address that begins with a 3 instead of a 1.

In a blockchain, what are the key principles that allow security threats to be eliminated?

The key principles that allow security threats to be eliminated are decentralization, consensus, and immutability. Each of these principles serves a different function in eliminating threats. Decentralization eliminates single points of failure, consensus eliminates double-spending and fraud, and immutability eliminates tampering.

What is double-spending?

Double-spending is a fraud in which one user sends some currency to another user, then attempts to double-spend that same currency by sending it to someone else.

What is blockchain architecture?

Blockchain architecture is a decentralized network of nodes (computers). Each node keeps track of all transactions and has a complete copy of the blockchain transaction database. All nodes in a blockchain network are equal, which means there is no centralized server/entity or hierarchy among them. All communication between nodes happens directly (peer to peer) or through known peers only, there is no central point of failure in such networks.

Explain the components of blockchain architecture?

There are 3 components of blockchain architecture: a transaction pool, a blockchain, and a peer-to-peer network. The transaction pool is essentially just an open list of transactions that are waiting to be processed by miners.

Explain the parts of EVM memory.

Ethereum Virtual Machine uses a set of registers, stacks, and memory. The EVM has two stacks: one for numbers and another for addresses. This means that there is no notion of a pointer in EVM memory.

What is a fork? Explain the types of forking?

A fork is a change to a software protocol that makes previously invalid blocks/transactions valid (or vice-versa), and as such requires all nodes or users to upgrade to the latest version of the protocol software. Here, its a type of forking:

• Hard forks
• Soft forks
• Accidental forks

What are Solidity's function modifiers?

There are five function modifiers in Solidity: pure, view, constant, fallback, and payable.

The first four function modifiers were added in EIP-110, while payable was added later on. Let’s understand one by one:

• Pure: This function does not read or write a smart contract's state.

• View: This function only reads the smart contract but cannot modify it.

• Constant: The pure modifier allows functions to change neither external state nor storage.

• Fallback: This function is called a non-existent function which required marked external.

• Payable: This function ensures that the Ether can send or received.

  Conclusion

The above questions are just a glimpse of what recruiters might ask you to test your knowledge around the concerned technology. Some questions will also deal with pure technical aspects that will measure your skills as a developer. It is highly advised that you completely understand the role and its requirements before applying and prepare accordingly.

Looking for a job in the blockchain space? Take a look at our blockchain developer jobs and sign up for more resources like this one!