Explore your grasp of blockchain technology with these 10 quiz questions. From its decentralized structure to its diverse applications beyond cryptocurrency, test your understanding of this transformative technology.
Blockchain serves as an immutable database distributed across networked nodes, facilitating consensus before updating transactions. It operates in a peer-to-peer fashion, decentralizing data management and enabling various functionalities like decentralized finance, cybersecurity, and supply chain management.
Challenge yourself with questions covering smart contracts, blockchain alterations, and enterprise applications. Whether you’re a novice or an expert, this quiz provides insights into fundamental concepts and real-world use cases. After completion, delve into explanations and additional resources for deeper understanding.
Table of Contents
Question 1
The five elements of blockchain are distribution, encryption, immutability, tokenization and:
A. Transparency
B. Authorization
C. Efficiency
D. Decentralization
Answer
D. Decentralization
Explanation
The following five building blocks are key aspects of successful blockchain transactions:
- Each network node is responsible for keeping a copy of the data and updating it.
- Data is converted into a cryptographic code to obscure information.
- Transactions usually can’t be changed or deleted.
- The value of an asset is converted into a digital token that can be recorded and shared.
- This enables real-time data sharing between parties, such as suppliers and distributors, while eliminating a single point of failure.
Depending on the established permission levels — public, private, hybrid or consortium — a user accessing the saved data on the blockchain can audit or interact with the data without a third party.
Question 2
What can an IT leader use enterprise blockchain for?
A. Streamline supply chains
B. Improve financial transactions
C. Provide identity management
D. All of the above
Answer
D. All of the above
Explanation
There are many reasons to incorporate blockchain into enterprise operations. IT leaders must decide what works best for their organizations when thinking about implementation. In addition to streamlining supply chains, financial transactions and identity management, blockchain can improve efficiency by automating the steps in numerous other business processes.
Question 3
True or false: Smart contracts are legally binding contracts.
A. True
B. False
Answer
B. False
Explanation
Smart contracts are a powerful application of DLT, typically blockchain, but don’t let the name fool you: Smart contracts are not the same as smart legal contracts, and their legal status has yet to be clarified in most jurisdictions. A smart contract defines rules, actions and expectations for two or more parties. It automatically executes the terms of the agreement when those parties meet preestablished conditions. Another valuable aspect of a smart contract is that an outside party can’t alter it, nor can it become lost, as may happen with a physical contract. The data exists on the blockchain permanently. Smart legal contracts are partially automated digital agreements that are legally enforceable. There are complex legal considerations to consider before deploying smart legal contracts.
Question 4
What are some of the advantages of implementing enterprise blockchain?
A. Reduce IT costs
B. Expand B2B and B2C networks
C. Enable new products
D. All of the above
Answer
D. All of the above
Explanation
Blockchain can reduce the friction organizations encounter when conducting transactions. No central authority exists, and no single party can make the data private or change rules without prior agreement. A single failure won’t take the whole blockchain down. Instead, the trust established through the P2P architecture of the technology can support efficiency in existing processes. In addition, blockchain is nearly impossible to hack, which boosts security.
Question 5
True or false: A user can alter data on a blockchain.
A. True
B. False
Answer
B. False
Explanation
The basic principle of blockchain is that the mechanisms it uses to store data are unchangeable once data is recorded. Blockchain data is meant to be permanent, tamperproof and trustworthy — and usually is. Should data need to be amended on a blockchain, timestamps are included with the recorded changes to provide a record that participants can validate by reaching a consensus, which is achieved when 51% of them verify the changes through mathematical calculations.
Security and privacy levels directly influence blockchain’s effectiveness and usefulness in the enterprise. Security features of blockchain include identity controls, software-mediated contracts and cryptography. However, common tactics, such as social engineering, phishing and attacking data in transit, are among the many security issues plaguing the technology. Other concerns include lack of regulation; cryptojacking, which is the unauthorized use of a computer for its resources to conduct cryptocurrency mining; and rug pulls, which occur when a cryptocurrency developer artificially inflates the feasibility of their brand-new token before disappearing with the funds poured into it by investors.
Question 6
What feature about enterprise blockchain is accurate?
A. Is relatively inexpensive
B. Has trust problems
C. Requires no change management
D. Is energy-efficient
Answer
B. Has trust problems
Explanation
Valid arguments exist against enterprise blockchain adoption. It can be more complex and costly than an on-premises, central database-driven system. Employees might need to gain specific new skills to interact with blockchain technology safely and successfully. And, because enterprise blockchains are typically private and controlled by a single organization, some participants may find them less trustworthy than public blockchains, which employ decentralized decision-making.
Question 7
What is one of the challenges of permissioned, also known as private or enterprise, blockchain?
A. Speed
B. Auditability
C. Security
D. Access control
Answer
B. Auditability
Explanation
IT leaders may encounter several challenges when incorporating permissioned blockchain into their organization. Some experts say that permissioned blockchains aren’t strictly blockchains because they lack the openness and decentralization of DLT. That means there’s no independent way to audit or verify the data. Furthermore, according to some estimates, blockchain technology consumes approximately 150 terawatt-hours of electricity annually. Applications on the blockchain can be a point of vulnerability, but strong user authentication and endpoint protections can make them more secure.
Question 8
What areas of cybersecurity does blockchain have the potential to improve?
A. Building security
B. Payment history
C. Password complexity
D. Resilience
Answer
D. Resilience
Explanation
Security leaders concerned about security, controlled access, accountability, transparency and efficiency could consider using blockchain in their digital transformation initiatives. Blockchain can support an organization’s cybersecurity protocols because of its permanence, transparency and distributed nature. The security safeguards provided by blockchain have the potential to make it a strong addition to the overall security toolbox.
Question 9
Blockchain has the potential to support the following enterprise goals except:
A. Uncover insights using data
B. Address a skills gap
C. Promote traceability
D. Boost personal communication between suppliers and producers
Answer
B. Address a skills gap
Explanation
Blockchain technology is already helping some food companies and retailers in their supply chain operations. These enterprise blockchains enable producers to create a digital token of physical goods with multiple attributes, such as the name of the food’s source and its certifications, to establish a chain of custody. Such traceability can help shed light on food creation, build trust between consumers and companies, and grow brand awareness. Furthermore, companies can establish data standards and decide on analytics to identify issues and trends.
Question 10
What are essential skills a blockchain developer should have?
A. Official asset registry, voting facilitation, back-office functions
B. Familiarity with blockchain architecture, foundation in cryptography, proficiency in common programming languages
C. Foundation in data structures, web development, understanding of smart contracts
D. Both B and C
Answer
D. Both B and C
Explanation
Establishing a career as a blockchain developer depends on meeting a company’s specific needs, and what works for one company may not necessarily translate to another. Basic skills, such as cross-disciplinary expertise and a foundation in open standards and interoperability-friendly technologies, are always useful. Soft skills, like communication and collaboration, work in any business setting. The ideal blockchain developer should grasp the main concepts of blockchain and what technologies work well with it, as well as understand what’s needed to make it work safely in a B2B system.