DEPARTMENT OF ARTIFICIAL INTELLIGENCE AND DATA SCIENCE

CCS339 CRYPTOCURRENCY AND BLOCKCHAIN TECHNOLOGIES

QUESTION BANK
UNIT II
1. What is a basic cryptocurrency? [CO2,K1]
 A basic cryptocurrency is a digital or virtual currency that employs
cryptographic techniques to secure transactions and control the
creation of new units.
 It operates on decentralized networks.

2. How are coins created in a cryptocurrency system? [CO2,K1]

 Coins in a cryptocurrency system are created through a process called
mining or minting, depending on the consensus mechanism.
 In mining-based systems like Bitcoin, new coins are generated as
rewards for miners who solve complex mathematical puzzles and
validate transactions.

3. What security measures are employed in the creation of coins in a

cryptocurrency system? [CO2,K1]
 Cryptocurrencies employ cryptographic techniques such as hashing
and digital signatures to ensure the security of coin creation.
 Additionally, consensus mechanisms like Proof of Work (PoW) or Proof
of Stake (PoS) are utilized to prevent fraudulent activities and maintain
the integrity of the blockchain ledger.

4. Why is decentralization important in the creation of coins in a

cryptocurrency system? [CO2,K1]
 Decentralization is crucial in the creation of coins in a cryptocurrency
system as it ensures that no single entity has control overthe validation
of transactions.
 In a decentralized network, multiple nodes collectively contribute to the
coin creation process, enhancing security and transparency.

5. Discuss the economic incentives associated with the creation of coins in a

cryptocurrency system? [CO2,K1]
 Economic incentives designed to motivate participants to contribute to
the network's security and operation. Miners or validators are rewarded
with newly created coins and transaction fees for their efforts in
maintaining the network and validating transactions.
6. What is double spending in the context of payments, and why is it a
concern in digital currency systems? [CO2,K1]
 Double spending refers to the act of spending the same digital
currency token more than once.
 It is a significant concern in digital currency systems because, unlike
physical cash, digital currencies can be replicated effortlessly without
detection.

7. What role did FORTH play as a precursor for Bitcoin scripting? [CO2,K1]
 FORTH is a stack-based programming language known for its simplicity
and efficiency, and it heavily influenced the design of Bitcoin's Script
language.
 Bitcoin's Script language enables users to specify conditions under
which transactions can be spent.

8. What are Bitcoin Scripts? [CO2,K1]

 Bitcoin Scripts are a set of instructions written in a scripting language
that define the conditions under which Bitcoin transactions can be
spent.
 These scripts are embedded within each transaction output and dictate
how the recipient can unlock and spend the funds.

9. How do Bitcoin Scripts enhance the functionality of the Bitcoin network?

[CO2,K1]
 Bitcoin Scripts enhance the functionality of the Bitcoin network by
enabling the implementation of smart contracts and customizable
spending conditions.
 Through Bitcoin Scripts, users can create more complex transactions
beyond simple payment transfers.

10. Discuss the security implications of Bitcoin Scripts? [CO2,K1]

 Bitcoin Scripts introduce both security benefits and risks to the Bitcoin
network.
 they enable the implementation of security features such as multi-
signature transactions, which require multiple signatures to authorize a
transaction.
11. What does P2P stand for in the context of Bitcoin, and why is it
significant? [CO2,K1]
P2P in the context of Bitcoin refers to the decentralized nature of the Bitcoin
network, where transactions occur directly between users without the need for
intermediaries such as banks or payment processors.

12. List the process of a transaction in the Bitcoin network? [CO2,K1]

A transaction in the Bitcoin network involves several steps.
 Initiation
 Signing
 Propagation
 Inclusion
 Confirmation
13. List the role of nodes play in the Bitcoin P2P network? [CO2, K1]
Nodes in the Bitcoin P2P network serve several functions.
 Relay transactions.
 Validate transactions.
 Maintain the blockchain.
 Secure the network.
14. How are transactions verified and confirmed in the Bitcoin network?
[CO2,K1]
 Transactions are verified and confirmed in the Bitcoin network through
a process called mining.
 Miners compete to solve complex mathematical puzzles, known as
Proof of Work (PoW), to validate transactions.
 Once a miner successfully solves a puzzle and creates a new block
containing verified transactions, it is propagated to the network and
added to the blockchain.
15. Explain the significance of decentralization in the Bitcoin network's
transaction process? [CO2,K2]
 Unlike traditional financial systems that rely on centralized authorities,
such as banks, to process and validate transactions, the Bitcoin network
operates in a decentralized manner.
 This means that transactions are verified and confirmed by a distributed
network of nodes and miners, eliminating the need for intermediaries.
16. What is block mining in the context of blockchain technology? [CO2,K1]
 Block mining refers to the process by which new blocks are created and
added to the blockchain in a decentralized network.
 Miners compete to solve complex mathematical puzzles, Proof of Work
(PoW) in Bitcoin's case, to validate transactions and create new blocks.
17. Explain the concept of block propagation in a blockchain network?
[CO2,K2]
 Block propagation refers to the process of distributing newly mined
blocks across the nodes in a blockchain network.
 Once a miner successfully mines a new block, it is propagated to other
nodes in the network through a peer-to-peer communication protocol.

18. What is block relay, and why is it important in blockchain networks?

[CO2,K1]
 Block relay is the process of transmitting newly mined blocks from one
node to another in a blockchain network.
 It involves sending the block's data across the network to ensure that
all nodes receive and validate the block.

19. How does block propagation time impact the efficiency of a blockchain
network? [CO2,K1]
 Block propagation time refers to the duration it takes for a newly mined
block to be transmitted across the network and validated by other
nodes.
 Shorter block propagation times lead to more efficient network
operation, as they reduce the likelihood of forks and increase the speed
at which transactions are confirmed.

20. Discuss one potential challenge associated with block propagation in

blockchain networks? [CO2,K1]
One potential challenge associated with block propagation is the risk of
network delays or congestion, especially in large-scale blockchain networks
with numerous nodes.
PART B

1. What defines a basic cryptocurrency? Explain its key characteristics? [CO2,K2]

2. Explain the process of coin creation in a cryptocurrency system? [CO2,K2]
3. Define double spending in the context of digital same currency payments. Discuss
why it poses a challenge and how it can be mitigated? [CO2,K2]
4. Explain the role of FORTH as a precursor for Bitcoin scripting? [CO2,K2]
5. Explain the purpose and functionality of Bitcoin Scripts. Provide examples of
common script operations and their use cases? [CO2,K2]
6. Explain the concept of a peer-to-peer (P2P) network in the context of Bitcoin?
[CO2,K2]
7. From initiation to confirmation in bitcoin network. Highlight the key steps
involved and the role of miners and nodes? [CO2,K2]
8. Explain the process of block mining in the Bitcoin network, including i)the role of
miners ii) mining hardware, iii)the Proof of Work [CO2,K2]
9. Define block propagation and block relay in the context of blockchain networks.
Discuss their importance in network synchronization and consensus? [CO2,K2]
10. Explain how the concepts of block mining, block propagation, and transaction
validation are interconnected in the Bitcoin network? [CO2,K2]