Blockchain Unit - 10 Mark Answers
1. What is Cryptocurrency? How is it different from traditional currency?
Cryptocurrency is a digital or virtual currency secured by cryptography. It operates independently of a central
authority and is based on blockchain technology.
Differences:
- Medium: Cryptocurrency is digital; traditional currency is physical (coins/notes).
- Control: Cryptocurrency is decentralized; traditional currency is centralized by governments.
- Transactions: Cryptocurrency uses peer-to-peer networks; traditional currency involves intermediaries like
banks.
- Examples: Bitcoin, Ethereum (crypto) vs. INR, USD (traditional).
Example:
If you send 1 Bitcoin to someone, it is recorded in a public blockchain ledger. The transaction is irreversible
and secure without needing a bank.
2. What is Blockchain? Explain its fundamental structure (Block, Hash, Ledger).
Blockchain is a decentralized digital ledger technology where transactions are recorded in blocks and linked
using cryptographic hashes.
Structure:
- Block: Contains data, hash of current block, and hash of previous block.
- Hash: Unique identifier for each block.
- Ledger: A shared, immutable record of all transactions.
Blockchain Unit - 10 Mark Answers
Example:
A Google Sheet shared across thousands of users where each new entry is verified, locked with a code
(hash), and visible to all users but cannot be changed.
3. Principles of Blockchain - Decentralization, Immutability, Transparency, Consensus
- Decentralization: No central authority controls the network.
Example: Bitcoin has no central bank.
- Immutability: Data once added cannot be changed.
Example: A past transaction in Ethereum can't be edited.
- Transparency: Everyone can see the transactions.
Example: Blockchain explorers show public records.
- Consensus: Agreement among nodes for validation.
Example: Bitcoin uses Proof of Work to confirm blocks.
4. What is Distributed Ledger Technology (DLT)? Types of Blockchain
DLT is a decentralized database that is managed by multiple participants. Blockchain is one form of DLT.
Types of Blockchain:
- Public Blockchain: Open to all (e.g., Bitcoin)
- Private Blockchain: Access restricted (e.g., Hyperledger)
- Consortium Blockchain: Controlled by a group (e.g., banking consortiums)
- Hybrid Blockchain: Combines public and private (e.g., Dragonchain)
Blockchain Unit - 10 Mark Answers
Example:
In Ethereum (a public blockchain), anyone can view and validate transactions.
5. What is Cryptocurrency? Features and Applications in Different Sectors
Features:
- Mining: Validates transactions.
- Security: Uses cryptography.
- Anonymity: Hides identity.
- Borderless: Used globally.
Applications:
- Banking: Fast transfers.
- Healthcare: Secure patient data.
- Finance: Decentralized finance (DeFi)
- High Integrity Management: Transparent supply chains.
Example:
Ripple helps banks like Santander perform fast, cheap international transactions.
6. Advantages and Disadvantages of Blockchain in Real World
Advantages:
- Transparent and secure transactions.
- Reduced costs.
- Decentralization eliminates middlemen.
Blockchain Unit - 10 Mark Answers
Disadvantages:
- Scalability issues.
- High energy use (in Proof of Work).
- Regulatory uncertainty.
Example:
IBM Food Trust uses blockchain to trace the journey of food from farm to store shelf.
7. What is Cryptography? Types with Examples
Cryptography secures data by converting it into unreadable formats.
Types:
- Symmetric Cryptography: Same key for encryption/decryption (e.g., AES)
- Asymmetric Cryptography: Different keys (e.g., RSA)
Example:
Bitcoin uses asymmetric cryptography. The user's private key signs the transaction; the public key is used to
verify it.
