Blockchain Technology

Blockchain Technology (Oct 2022)

TY BSC-CS (2019 Pattern)

Q1) Attempt any eight of the following: (One mark each)

a) What is the formula to calculate transaction fee in Ethereum?

- Formula: Transaction fee = Gas used Gas price.
- Gas is the unit used to measure the computational work, and Gas price is the cost of one gas
unit.

b) What is plain text and cipher text?

- Plaintext: Original, readable data before encryption.
- Ciphertext: Encrypted data that is unreadable without decryption.

c) What is FPGA?
- FPGA (Field-Programmable Gate Array) is an integrated circuit that can be programmed after
manufacturing to perform specific tasks.

d) In AES, on which factor does the number of encryption rounds depend on?
- The number of encryption rounds in AES depends on the length of the encryption key (128, 192,
or 256 bits).

e) What is a smart contract?

- A smart contract is a self-executing contract where the terms of the agreement are directly
written into code, and the contract is automatically executed when conditions are met.

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f) What is the size of the encryption key in DES?

- The size of the encryption key in DES (Data Encryption Standard) is 56 bits.

g) What is ASIC?
- ASIC (Application-Specific Integrated Circuit) is a type of hardware designed for a specific
application, like mining cryptocurrencies, offering higher efficiency than general-purpose
processors.

h) Which algorithm is used by Bitcoin to verify transactions?

- Bitcoin uses the SHA-256 (Secure Hash Algorithm 256-bit) algorithm to verify and secure
transactions.

i) Which is a unique PoS cryptocurrency that is aimed at delivering interoperability among other
blockchains?
- Polkadot is a unique Proof-of-Stake (PoS) cryptocurrency that facilitates interoperability
between different blockchains.

j) What is DApp?
- DApp (Decentralized Application) is an application that runs on a decentralized network like
Ethereum, where the backend code runs on a blockchain rather than a centralized server.

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Q2) Attempt any four of the following: (2 marks each)

a) What is the difference between public and private blockchains?

- Public Blockchain: Open to everyone, and anyone can participate in transactions or validating
blocks (e.g., Bitcoin, Ethereum).
- Private Blockchain: Restricted access where only authorized participants can validate
transactions or access the network (e.g., Hyperledger).

b) Blockchains are slow as compared to databases. Justify.

- Blockchains are slower than traditional databases because each transaction requires consensus
from multiple nodes to validate and secure, while traditional databases rely on a central server.
- Blockchain transactions are also recorded across many distributed nodes, making it more time-
consuming.

c) What is P2P crypto Exchange?

- A Peer-to-Peer (P2P) crypto exchange allows users to trade cryptocurrencies directly with each
other without the need for an intermediary like a centralized exchange.
- It connects buyers and sellers, enabling them to agree on prices and payment methods.

d) What is BFT?
- BFT (Byzantine Fault Tolerance) is a property of a distributed system that allows it to continue
functioning correctly even if some nodes fail or behave maliciously.
- It is crucial for achieving consensus in decentralized systems.

e) What is Hybrid Blockchain?

- A hybrid blockchain combines features of both public and private blockchains, offering flexibility
by allowing public access while maintaining privacy and control for certain operations.
- It is often used in enterprise settings.

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Q3) Attempt any two of the following: (4 marks each)

a) Write a short note on the life cycle of a smart contract.

- Creation: The contract code is written and deployed on the blockchain.
- Activation: Once deployed, the contract is activated and ready to execute when conditions are
met.
- Execution: When predefined conditions are satisfied, the smart contract automatically executes
its terms.
- Termination: After execution, the contract either terminates or can be updated if necessary.
- Upgrade: Some smart contracts are designed to be upgradeable if new features or bug fixes are
needed.
- Audit: Regular auditing is done to ensure the contract is functioning as expected.
- Maintenance: The contract may require maintenance for updates or repairs.
- End of Life: Once completed, the contract may be terminated permanently.

b) What is Hard & Soft forks?

- Hard Fork: A permanent divergence in the blockchain, creating two separate versions of the
blockchain; requires all participants to upgrade to the new version (e.g., Bitcoin Cash).
- Soft Fork: A backward-compatible upgrade to the blockchain, where old participants can still
operate with the new version but new rules are implemented (e.g., SegWit in Bitcoin).
- Hard forks can lead to two chains, while soft forks maintain the integrity of the original chain.

c) What is PoW?
- Proof of Work (PoW) is a consensus algorithm where miners solve complex mathematical
problems to validate transactions and create new blocks.
- It requires significant computational power and energy, ensuring security by making it difficult
to alter blockchain data.
- Bitcoin and Ethereum (before Ethereum 2.0) use PoW.

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Q4) Attempt any two of the following: (4 marks each)

a) Write a short note on challenges of blockchain.

- Scalability: Blockchain struggles to process a large number of transactions per second, leading
to delays.
- Energy Consumption: Proof-of-work blockchains, like Bitcoin, consume a lot of energy, raising
environmental concerns.
- Regulation: Lack of regulation and legal clarity makes it difficult for businesses to adopt
blockchain solutions.
- Adoption: Blockchain faces resistance in adoption due to its complexity and the need for
widespread changes in infrastructure.
- Security: While secure, blockchain is still vulnerable to 51% attacks and other exploits.
- Privacy: Public blockchains are transparent, which might not be ideal for all applications
requiring privacy.
- Cost: Implementing blockchain solutions can be costly due to high infrastructure and
maintenance expenses.

b) Write a short note on ICO.

- ICO (Initial Coin Offering) is a fundraising method where startups sell a new cryptocurrency or
token to raise capital for their projects.
- Investors purchase tokens with the expectation that the project will succeed, and the value of
the tokens will increase.
- ICOs are often used in blockchain and cryptocurrency-related projects.
- They provide quick capital, but are risky due to lack of regulation, and some may lead to scams.
- ICOs differ from IPOs in that they don’t require the same level of government oversight.
- Regulatory bodies have started to examine ICOs for fraud and money laundering.

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c) Which are the different value data types in Solidity?

- Boolean: Represents true or false.
- Integer: Can be signed or unsigned (e.g., `int`, `uint`).
- Fixed-point numbers: Used for representing fractions with a fixed number of decimals.
- Address: Ethereum address type used to store account addresses.
- String: A sequence of characters (e.g., "Hello").
- Bytes: Fixed-size byte arrays used for storing raw data.
- Array: A list of elements of the same data type.
- Mapping: Key-value pairs used for storing data with an index or address as the key.

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Q5) Attempt any one of the following: (3 marks each)

a) Write a short note on first Generation Blockchain.

- First Generation Blockchain: Refers to the original blockchain models like Bitcoin that focused
on being a decentralized digital currency.
- They introduced the concept of cryptographic security and proof of work for consensus.
- Bitcoin, launched in 2009, is the first generation and was primarily used for peer-to-peer
transactions.
- It has limited functionality, with no support for smart contracts or decentralized applications.
- Transaction speed and scalability were initial challenges that limited its utility.
- Still, Bitcoin’s underlying blockchain is considered revolutionary for the crypto world.

b) Describe EVM with the help of a neat diagram.

- EVM (Ethereum Virtual Machine) is the runtime environment that processes smart contracts
and transactions on the Ethereum blockchain.
- Functionality: It enables the execution of DApps and the deployment of smart contracts.
- Structure: It consists of a stack for executing operations, a memory system, and a gas system
for transaction management.
- Execution: EVM executes the code of smart contracts written in languages like Solidity.
- Isolation: Each EVM execution is isolated from the underlying network, ensuring security.
- Gas: It uses gas to measure computational work for each transaction and to prevent infinite
loops or excessive resource usage.
- Diagram: (Include a simple flowchart showing input from the Ethereum network, smart contract
code execution, and output results)

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