Blockchain Architecture Design: Last year Question Paper Questions with Answer

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Important Questions For Blockchain Architecture Design:
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Section A: Short Question Blockchain Architecture Design

a. What is the principle on which blockchain technology is based on ? 

Ans. It enables the information to be distributed among the users without being copied. 

b. Why is blockchain a trusted approach ? 

Ans. Blockchain is a trusted approach due to the following reasons : 

• 1. It is easily compatible with other business applications due to its open-source nature. 
• 2. It is safe, hacking proof and encrypted. 
• 3. There is no central authority to control it. 
• 4. Everyone involved approved of the way a transaction was added to the blockchain.
• 5. The transaction is immutable, which means we cannot edit it after it has been added to the blockchain.

c. Name the two types of records that are present in the blockchain database ?

Ans. Following are two types of records in a blockchain database :

• 1. Transactional Records
• 2. Block Records
  Both the records can easily be accessed and can integrate with each other without following any complex algorithm. 

d. Differentiate between the term hyper ledger and blockchain ?  

Ans. 

e. What are encryption in blockchaining and its role in blockchain ? 

Ans. Encryption is a method of encrypting data so that only authorised parties can decipher it. Blockchain employs public/private key encryption (RSA Security). This encryption is used by blockchain to keep data safe in the block, so that it can only be decoded by a user who has a valid private key. 

f. What are the different types of tokens used in blockchains ?  

Ans. There are essentially two types of tokens used in blockchains : 

• 1. Utility Tokens: Utility tokens are cryptocurrencies that are used for a specified purpose, such as purchasing a specific commodity or service. 
• 2. Security Tokens: A security token represents ownership in an underlying real-world asset.  

g. What are the application block identifiers in blockchaining ? 

Ans. The cryptographic hash of the block’s header serves as its identify. The specific block is identified in a unique way using these block identifiers. This hash may be generated differently by different blockchains. Bitcoin, for example, employs the double hash of its header as its identification.

Section B : Long Questions in Blockchain Architecture Design

a. What type of records can be kept in a blockchain ? Is there any restriction on same ?

Ans.

• 1. Following are two types of records that can be kept in the blockchain : 
  • i. Transactional Records 
  • ii. Block Records
• 2. Both these records can be easily accessed. 
• 3. It is also possible to integrate them without following the complex algorithms. 

Restriction for keeping records : 

• 1. No, it is not possible to impose restrictions on record retention in the blockchain approach.
• 2. Every sort of data, such as bank records, medical records, photographs, documents, Instagram messages, and so on, can be stored on a blockchain.
• 3. Nevertheless, blockchains are not intended to hold enormous amounts of data.
• 4. It is not advised to store huge datasets in blockchain.

b. Explain the major elements of the blockchain ecosystem in detail ?  

Ans. Following are four main elements/components in a complete blockchain ecosystem : 

• A. Network of nodes : 
  • 1. All nodes are linked together to form a network that validates and keeps track of all transactions.
  • 2. Each transaction is validated using the consensus process.
  • 3. Once the transactions have been authenticated, they are added to the blockchain.
  • 4. The process of entering transactions into the blockchain is known as block mining.
  • 5. A blockchain block can include zero or many transactions.
• B. Distributed database :  
  • 1. A blockchain is a network as well as a database. It saves the data produced by the network.
  • 2. Unlike centralised databases, blockchain is present in each node of the blockchain network.
  • 3. As a result, each node has a copy of the blockchain.
  • 4. Each block will contain a list of transactions, a timestamp, and information about the block before it.
  • 5. Because of this connection to the prior block, blockchain is unchangeable.
  • 6. If data in a block is tampered with, the hash of the block changes, rendering all blocks following the tampered block invalid.
• C. Shared ledger : 
  • 1. The ledger is shared among all nodes. 
  • 2. If an attacker attempts to tamper with the blockchain, the attacker must change every node in the network.
  • 3. This makes it harder to assault.
  • 4. In order to tamper with the blockchain, the attacker must control at least 51% of the network’s nodes.
• D. Cryptography :  
  • 1. Blockchain data is cryptographically hashed.
  • 2. The hash function is a one-way function, which means that while the hash may be formed from plain text, obtaining the plain text from the hash is exceedingly difficult.
  • 3. As a result, information tracking and unwanted data tampering are not possible.

c. Mention the difference state difference between proof-of work and proof-of-stake in blockchaining. 

Ans. 

d. What are the key principles in blockchain that are helpful in eliminating the security threats that needs to be followed? 

Ans. The fundamental principles in blockchain that must be followed to eliminate security threats are :  

• 1. Auditing : 
  • i. An audit entails determining whether or whether recorded transactions are supported by relevant, reliable, objective, accurate, and verifiable information.
  • ii. The admission of a transaction into a trustworthy blockchain may be sufficient suitable audit proof for certain financial statement statements, such as the transaction’s occurrence.
  • iii. In a Bitcoin transaction for a product, for example, the transfer of Bitcoin is recorded on the blockchain.
  • iv. However, based simply on information from the Bitcoin blockchain, the auditor may or may not be able to determine the product that was delivered.
• 2. Securing applications : 
  • i. Blockchain technology produces a structure of data with inherent security qualities. 
  • ii. It’s based on principles of cryptography, decentralization and consensus, which ensure trust in transactions. 
• 3. Securing testing and similar approaches :
  • i. To ensure confidence, testers must confirm that all blockchain components function properly and that all applications interact with it in a trustworthy manner.
  • ii. Functional, performance, API, node testing, and other specialised tests are examples of core tests that should be done.
• 4. Database security : 
  • i. The records on a blockchain are secured through cryptography. 
  • ii. Network participants each have their own private key, which is assigned to transactions and serves as a personal digital signature.
• 5. Continuity planning :
  • i. Business Continuity Planning (BCP) is the process of developing a strategy for preventing and recovering from potential hazards to a business.
  • ii. The strategy ensures that workers and assets are safe and that operations can resume quickly in the case of a disaster.
• 6. Digital workforce training : 
  • i. The term “digital workforce” refers to a multitude of robotic and automated technologies for increasing workplace productivity.
  • ii. Digital workforce training contributes to more efficient blockchain security.

e. What is the application of merkle trees ? Write use of merkle trees in blockchains ?  

Ans. Application of Merkle trees :  

• 1. Merkle trees are used in distributed systems for efficient data verification. 
• 2. Merkle trees can be used to verify any kind of data stored, handled and transferred in and between computers. 
• 3. Merkle trees help ensure that data blocks received from other peers in a peer-to-peer network are received undamaged and unaltered. 
• 4. Merkle trees can be used to check that other peers in a peer-to-peer network do not lie and send fake blocks. 
• 5. Merkle trees can be used to check inconsistencies.

Use of Merkle trees in blockchains: Following are various Merkle tree implementations in blockchains : 

• 1. Git, a distributed version control system, is one of the most widely used. Git uses Merkle tree to store its data (source). 
• 2. Interplanetary File System, a peer-to-peer distributed protocol, uses Merkle tree to provide a solution for private file storage in the blockchain. 
• 3. Apache Cassandra uses Merkle Trees to detect inconsistencies in replicas. 
• 4. Amazon DynamoDB, a No-SQL distributed databases, use Merkle trees to control discrepancies. 
• 5. Ethereum also uses a Merkle Tree, but a different type than Bitcoin. Ethereum uses a Merkle Patricia Trie.

Section 3 : Essential Questions in Blockchain Architecture Design

a. What are function modifiers in solidity? How is blockchain distributed ledger different from a traditional ledger ?  

Ans. Function Modifiers in Solidity : 

• 1. Function Modifiers are code that can be run before and/or after a function call.  
• 2. Function Modifiers are used to modify the behaviour of a function. 
• 3. Function Modifiers can be used to : 
  • i. Restrict access 
  • ii. Validate inputs  
  • iii. Guard against reentrancy hack 

b. What is the concept of double spending ? What is a DAPPS in blockchain ? 

Ans. Double Spending : 

• 1. A potential issue with a digital currency scheme that allows the same digital token to be spent more than once is double-spending.
• 2. A digital token, unlike cash, is formed of a digital file that can be duplicated or modified.
• 3. The simplicity with which digital currency can be copied is the root cause of double-spending.
• 4. Double-spending generates inflation by creating new copies of previously unexisting currency.
• 5. Central clearing counterparty and blockchain are the major solutions for combating double-spending.
• 6. Blind signatures and secret splitting are fundamental cryptographic approaches for preventing double-spending.

DAPPS in blockchain :

• 1. A decentralised application (dapp) is a decentralised network-based programme that combines a smart contract and a frontend user interface.
• 2. A dapp’s backend code is hosted on a decentralised peer-to-peer network.
• 3. To make calls to its backend, a dapp can contain frontend code and user interfaces built in any language.
• 4. Its frontend can be hosted on decentralised storage systems like the InterPlanetary File System (IPFS).

Section 4 : Previous Questions in Blockchain Architecture Design

a. Write and explain the blockchain architecture in depth. What are the primary benefits of immutability in blockchaining ?

Ans. The following diagram displays the layered architecture of blockchain :

• A. Hardware / Infrastructure layer : 
  • 1. Blockchain is a peer-to-peer network of computers that computes, validates, and records transactions in an orderly format in a shared ledger.
  • 2. A node is a computer in a peer-to-peer network. These nodes are scattered and decentralised.
  • 3. Transactions are validated, organised into blocks, and broadcasted to the blockchain network by nodes.
  • 4. Once consensus has been reached, nodes commit the block to the blockchain network and update their local ledger copy.
• B. Data layer :
  • 1. Blockchain is a decentralised, massively replicated database (distributed ledger) in which transactions are organised in blocks and distributed across a P2P network.
  • 2. This database stores the current state of all accounts.
  • 3. A blockchain’s data structure can be described as a linked list of blocks in which transactions are ordered.
  • 4. The data structure of the blockchain consists of two basic components: pointers and a linked list.
  • 5. Pointers are variables that point to the position of another variable.
  • 6. A linked list is a chained list of blocks, each with data and a pointer to the previous block.
• C. Network layer : 
  • 1. In a P2P network, computers (nodes) are distributed and share the network’s workload to achieve the desired result.
  • 2. Nodes execute blockchain transactions.
  • 3. The network layer, also known as the P2P layer, is in charge of inter-node communication.
  • 4. It handles discovery, transactions, and block propagation. This layer is also known as the propagation layer.
  • 5. This P2P layer ensures that nodes may discover one other and interact, propagate, and synchronise with each other in order to maintain the blockchain network’s valid present state.
  • 6. This layer also takes care of the world state propagation. 
• D. Consensus layer : 
  • 1. The consensus protocol is the foundation of blockchain systems. A consensus algorithm is at the heart of every blockchain.
  • 2. The consensus layer is the most important layer in any blockchain.
  • 3. Consensus is in charge of authenticating the blocks, ordering them, and guaranteeing that everyone agrees on it.
  • 4. Following are the key points regarding the consensus layer: 
    • i. Consensus techniques (algorithms) generate an unmistakable set of agreements across nodes in a dispersed P2P network.
    • ii. Consensus maintains all nodes in sync. Consensus guarantees that all nodes agree on the truth.
    • iii. Consensus maintains power distribution and decentralisation. The blockchain network cannot be controlled by a single entity.
  • A consensus protocol ensures reliability in a P2P network.
• E. Application layer: 
  • 1. Smart contracts, chaincode, dapps, and user interfaces comprise the application layer.
  • 2. The application layer is further subdivided into the application layer and the execution layer.
  • 3. The application layer contains the programmes that end users utilise to engage with the blockchain network.
  • 4. It includes scripts, APls, user interfaces, and frameworks.
  • 5. The execution layer is a sublayer that includes smart contracts, underlying rules, and chaincode.
  • 6. This sublayer contains the actual code that is run as well as the rules that are executed.
  • 7. A transaction moves from the application layer to the execution layer, but it is validated and executed at the semantic layer (smart contracts and rules).

Benefits of immutability in blockchain: Following are some benefits of immutability :  

• 1. Complete data integrity :
  • i. By utilising a blockchain technology ledger, you may ensure the data trail and complete history of an application.
  • ii. By recalculating the block hashes, we can readily check the chain’s integrity.
  • iii. If there is a difference between the block data and its matching hash, the transactions are invalid.
  • iv. This enables companies and industry regulators to detect data tampering promptly.
• 2. It simplifies auditing : 
  • i. The ability of an organisation to establish a complete and irrefutable history of a transactional ledger simplifies and expedites the auditing process.
  • ii. Moreover, the ability to demonstrate that data has not been tampered with is a significant benefit for firms that adhere to industry norms.
  • 3. It increases efficiencies :
    i. Blockchain’s immutability not only benefits auditing, but it also opens up new potential in analytics, inquiry, and overall business processes.
  • ii. This capability saves time and money for a business when auditing specific application data, tracking important issues, backing up and restoring a database to retrieve information, and so on.
• 4. It can be used as Proof of Fault :
  • i. Organizations frequently have disagreements over blame in business.
  • ii. While blockchain cannot be used to resolve a large number of legal processes, it may be used to prevent the bulk of data provenance and integrity conflicts.
  • iii. Blockchain finality enables us to demonstrate who did what and when.

b. Explain the steps that are in the blockchain project implementation. Mention the significance of blind signature and how it is useful ? 

Ans. The blockchain development process consists of the following six stages :  

• 1. Identify the goal :  
  • i. First and foremost, it is critical to establish a problem description and comprehend all of the challenges you wish to address with a proposed solution.
  • ii. Be certain that the blockchain solution will boost your company’s capabilities.
  • iii. Determine whether you need to move your present solution to the blockchain or create a new application from scratch.
  • iv. When you’ve decided that a blockchain solution is necessary for your business operations, the following step is to choose the best blockchain platform and blockchain development tools for your project.
• 2. Choose the right blockchain platform : 
  • i. Creating a blockchain from scratch involves extensive research and can take months or years to complete correctly.
  • ii. As a result, you should create a blockchain app on top of a blockchain platform that matches your company needs.
  • iii. Choose the best blockchain platform for your application based on variables such as consensus method and problems to be solved.
  • iv. Once the blockchain platform has been picked, you must conduct a brainstorming session to determine the particular business requirements.
• 3. Brainstorming and blockchain ideation :  
  • i. After determining the blockchain platform, you should concentrate on developing company requirements and brainstorming concepts.
  • ii. Determine whether technology components should be added to the blockchain ecosystem as off-chain or on-chain entities.
  • iii. Develop a product plan that will assist you in developing an application within a certain time frame.
  • iv. Create a blockchain model and a conceptual process for the blockchain application.
  • v. Determine if the application should be created on a permissioned or permissionless blockchain network.
• 4. Proof of Concept (PoC) : 
  • i. A proof of concept is created to demonstrate a blockchain project’s practical usefulness.
  • ii. It can be a design prototype or a theoretical construct.
  • iii. Each project requires theoretical instances in order for users to comprehend the applicability and viability of the product.
  • iv. A prototype is designed after generating a theoretical build-up and collecting feedback.
  • v. Once the PoC has been approved by the client, the following phase is to create technical and visual designs for the application.
• 5. Visual and technical designs : 
  • i. Visual designs are made to give the application a look and feel, whilst technical designs represent the application’s technology architecture.
  • ii. Each software component has its own Ul.
  • iii. APls are created and integrated to run a back-end application.
  • iv. The application is ready for development once the admin consoles and user interfaces have been designed.
• 6. Development :  
  • i. Development is a critical stage of the blockchain development process, during which you should be prepared to build the blockchain app.
  • ii. At this level, you must either develop or integrate APIs for specific application use cases.
  • iii. The application is built under multiple versions.  

Significance of blind signature :

• 1. A blind signature is a type of digital signature in which the content is obscured before being signed. As a result, the signer will not be aware of the message’s content.
• 2. The signed message can be unblinded after it has been blinded. At the present, it functions similarly to a standard digital signature and can be publicly verified against the original message.
• 3. A variety of public-key encryption techniques can be used to implement blind signature.
• 4. Blind signatures are commonly used in privacy-related protocols where the signer and message author are not the same person.

Use of blind signature :

• 1. The blind signature is widely used in cryptography applications.
• 2. The blind signature is used in election/voting systems.
• 3. The blind signature is used in digital cash schemes.

Section 5 : Important Question Bank in Blockchain Architecture Design

a. What are the key principles in blockchain that are helpful in eliminating the security threats that needs to be followed. 

Ans. The fundamental principles in blockchain that must be followed to eliminate security threats are :

• 1. Auditing : 
  • i. An audit entails determining whether or whether recorded transactions are supported by relevant, reliable, objective, accurate, and verifiable information.
  • ii. The admission of a transaction into a trustworthy blockchain may be sufficient suitable audit proof for certain financial statement statements, such as the transaction’s occurrence.
  • iii. For example, in a Bitcoin transaction for a product, the transfer of Bitcoin is recorded on the blockchain. Nevertheless, the auditor may or may not be able to determine the product that was provided by only examining information on the Bitcoin blockchain.
  • iv. However, based simply on information from the Bitcoin blockchain, the auditor may or may not be able to determine the product that was delivered.
• 2. Securing applications : 
  • i. Blockchain technology creates a data structure with intrinsic security properties.
  • ii. It is founded on cryptographic, decentralisation, and consensus concepts that ensure transaction confidence.
• 3. Securing testing and similar approaches :  
  • i. To ensure confidence, testers must confirm that all blockchain components function properly and that all applications interact with it in a trustworthy manner.
  • ii. Functional, performance, API, node testing, and other specialised tests are examples of core tests that should be done.
• 4. Database security :
  • i. The records on a blockchain are secured through cryptography. 
  • ii. Network participants have their own private keys that are assigned to the transactions they make and act as a personal digital signature. 
• 5. Continuity planning : 
  • i. Business Continuity Planning (BCP) is the process of developing a strategy for preventing and recovering from potential hazards to a business.
  • ii. The strategy ensures that workers and assets are safe and that operations can resume quickly in the case of a disaster.
• 6. Digital workforce training : 
  • i. The term “digital workforce” refers to a multitude of robotic and automated technologies for increasing workplace productivity.
  • ii. Digital workforce training contributes to more efficient blockchain security.

b. Mention and list the parts of EVM memory in blockchaining. 

Ans. Ethereum Virtual Machine (EVM) : 

• 1. The Ethereum Virtual Machine (EVM) is a processing engine that functions similarly to a decentralised computer with millions of executable projects.
• 2. It serves as the virtual computer that serves as the foundation of Ethereum’s complete operational system.
• 3. It is regarded as the element of Ethereum that handles execution and smart contract deployment.
• 4. The EVM’s role is to introduce a variety of additional capabilities to the blockchain to ensure that users encounter few troubles on the distributed ledger.
• 5. The EVM is used by every Ethereum node to ensure blockchain consensus.
• 6. Ethereum enables smart contracts, which are pieces of code that execute on Ethereum.
• 7. The EVM is totally isolated, which means that the code within it has no access to the network, file system, or other processes.

Parts of EVM Memory :

The memory of an EVM is divided into three types :  

Storage : 

• 1. Storage values are stored permanently on the blockchain network. 
• 2. It is extremely expensive. 

Memory : 

• 1. Memory is a temporary modifiable storage. 
• 2. It can be accessed only during contract execution. Once the execution is finished, its data is lost. 

Stack :  

• 1. A stack is temporary and non-modifiable storage. 
• 2. Here, when the execution completes, the content is lost.

Section 6 : Explained Questions in Blockchain Architecture Design

a. Name organizations that can use blockchain technology. What is the difference between blockchain and database ?  

Ans. 

Following are the organizations that use blockchain technology :  

• 1. Bank and Finance: HSBC, Barclays, VISA. 
• 2. Supply Chain: Walmart, Unilever. 
• 3. Healthcare: Pfizer, Change Healthcare, CDC. 
• 4. Insurance: MetLife, AIG. 
• 5. Energy: Siemens, Shell. 
• 6. Travel: Etihad Airways, Singapore Airlines, British Airways.

b. What is the concept of executive accounting ? Does blockchain support the same ? 

Ans.

• 1. Executive accounting is intended for service-oriented enterprises that require a sophisticated yet user-friendly accounting solution.
• 2. Executive accounting has numerous complex features such as three types of invoicing, multi-currency support, multiple bank account support, and other useful tools.
• 3. Executive accounting is a single-user system that may be expanded to accommodate an unlimited number of users.
• 4. Executive accounting is intended solely for businesses that provide individuals with services.
• 5. There is no definite upper limit on services, and any service can be managed by executive accounting.
• 6. Yes, blockchain support executive accounting.
  7. Blockchain has algorithms that are specially meant to handle executive accounting. 
• 8. In fact, it cut down many problems that are associated with executive accounting. 

Section 7 : Solved Questions in Blockchain Architecture Design

a. Which cryptographic algorithm is used in blockchain ? Explain in detail. 

Ans. Following cryptographic algorithms are used in blockchain: 

A. Elliptic Curve Cryptography (ECC) :

• 1. Elliptic Curve Cryptography (ECC) is a key-based encryption technology.
• 2. ECC focuses on pairs of public and private keys for blockchain network decryption and encryption.
• 3. ECC is a strong cryptography method.
• 4. It generates security between key pairs for public key encryption using elliptic curve mathematics.
• 5. Due to its lower key size and capacity to maintain security, ECC has gradually gained favour.
• 6. ECC’s approach to public key cryptography systems is based on how elliptic curves are algebraically constructed over finite fields.
• 7. ECC generates keys that are mathematically more difficult to breach.
• 8. As a result, ECC is regarded as the next generation implementation of public key cryptography in blockchain networks.

B. SHA-256 Hashing Algorithm :

• 1. The Bitcoin protocol’s hash function and mining method is Secure Hashing Algorithm (SHA)-256.
• 2. It refers to the cryptographic hash function, which generates a 256-bit result.
• 3. It moderates address generation and management, as well as transaction verification.
• 4. It is a Secure Hashing Algorithm, which is widely used in digital signatures and authentication.
• 5. SHA-256 is the most well-known cryptographic hash algorithm because it is widely employed in blockchain technology.
• The National Security Agency (NSA) created the SHA-256 Hashing method in 2001.
• 7. The algorithm is a SHA-2 version (Secure Hash Algorithm 2).
• 8. SHA-256 is also used in major encryption protocols like SSL, TLS, and SSH, as well as open source operating systems like Unix/Linux.
• 9. The hash algorithm is incredibly secure, and its inner workings are not known to the general public.
• 10. It is used to protect sensitive information because of its capacity to verify data content without revealing it.
• 11. Because it does not require the storage of actual passwords, it is also used for password verification.
• 12. A brute force approach is exceedingly unlikely to succeed because to the vast number of possible combinations.

b. Mention various limitations of blockchaining in detail with proper representation. 

Ans. Following are the limitations/disadvantages of blockchain :

• 1. Scalability is an issue: Blockchains are not as scalable as their centralised counterparts. As a result, there is network congestion. The more individuals or nodes join the network, the more likely it will slow down.
• 2. Consume too much energy: Bitcoin rewards miners for solving challenging mathematical puzzles. The tremendous energy consumption makes these complicated mathematical problems unsuitable for use in the actual world. As the ledger is updated with a new transaction, the miners must solve the problems, which requires a significant amount of energy.
• 3. Data is immutable: Immutability of data has always been one of the blockchain’s major drawbacks. For example, if you have completed payment and need to go back and modify that payment, you cannot do so.
• 4. Blockchains are inefficient: One of the major downsides of blockchain is that there are numerous blockchain systems that have numerous inefficiencies within the system. For example, Bitcoin’s blockchain technology is inefficient for data storage.
• 5. Not completely secure: Other systems are not as secure as blockchain technology. This does not, however, imply that it is totally secure. The blockchain network can be corrupted in a variety of methods, including 51% attacks, double-spending, DDoS attacks, cryptographic cracking, and so on.
• 6. Cost of implementation: The true cost of using blockchain technology is enormous. Even though the majority of blockchain solutions are open source, they demand significant commitment from the company that wishes to pursue them.
• 7. Expertise knowledge: It is difficult to implement and manage a blockchain project. Businesses must engage several blockchain experts, which causes an issue and is considered one of the downsides of blockchain.