Top Ethereum Interview Questions (2024)
What is Ethereum in blockchain?
What Is a Blockchain?
What Is Cryptocurrency?
How can fraud be prevented when every transaction is checked?
What is the difference between Ether and Ethereum?
How Does Ethereum Work?
Q: What is Ethereum in blockchain?
Ans:
Ethereum, often known as Ether (ETH) or Ethereum, is a blockchain platform with its own cryptocurrency. Ethereum is a decentralised, open-source blockchain that allows users to create decentralized applications. Ether is the platform's native cryptocurrency, and it is second only to Bitcoin in terms of market value among cryptocurrencies.
Q: What Is a Blockchain?
Ans:
A blockchain is a decentralized, open ledger that stores transactions as code. In practise, it's similar to a checkbook that's spread across thousands of computers all across the globe. Transactions are recorded in "blocks," which are then linked in a "chain" of prior bitcoin transactions.
"Imagine a book where you write down everything you spend money on each day," says Buchi Okoro, CEO and co-founder of Quidax, an African cryptocurrency exchange. "Each page is like a block, and the entire book, or a collection of pages, is a blockchain".
Everyone who uses a cryptocurrency has their own copy of this book on a blockchain, which creates a unified transaction record. Each new transaction is logged by software as it occurs, and every copy of the blockchain is updated with the new information at the same time, ensuring that all records are identical and correct.
Q: What Is Cryptocurrency?
Ans:
Cryptocurrency is a form of digital money that is decentralised and based on blockchain technology.
A cryptocurrency is a digital, encrypted, and decentralised means of exchange. There is no central authority that controls and maintains the value of a cryptocurrency, unlike the US dollar or the Euro. Instead, these responsibilities are divided throughout the internet among the users of a cryptocurrency.
Bitcoin was the first cryptocurrency, Satoshi Nakamoto first proposed Bitcoin as a peer-to-peer electronic cash system in a 2008 paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System".
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Q: How can fraud be prevented when every transaction is checked?
Ans:
Each transaction is validated using one of two techniques to prevent fraud: proof of work or proof of stake.
Proof of work
Proof of work is a process of validating transactions on a blockchain in which a mathematical problem is provided to computers race to solve.Proof of stake
Some cryptocurrencies utilise a proof of stake verification approach to decrease the amount of power required to verify transactions. The amount of cryptocurrency each individual is willing to "stake", or temporarily lock up in a common safe, for the chance to participate in the process, limits the number of transactions each person can verify. Okoro describes it as "almost bank collateral." Each person who invests in cryptocurrency has the potential to verify transactions, but the likelihood of being chosen increases as the amount invested grows.
Q: How Can You Mine Cryptocurrency?
Ans:
Mining is the process of releasing new units of bitcoin into the world in exchange for validating transactions. While it is theoretically possible for the common person to mine cryptocurrencies, with proof-of-work systems like Bitcoin, it is becoming increasingly difficult.
Note that Proof of Work cryptocurrency takes a lot of energy in mining. Bitcoin farms consume 0.21 percent of the world's electricity, according to estimates. Most Bitcoin miners use 60% to 80% of their earnings to pay electricity costs, according to estimates.
As validators are selected at random based on how much they stake, the proof of stake model requires less high-powered computing. You must, however, already have a cryptocurrency in order to participate. (You can't stake anything if you don't have any crypto).
Q: What is the difference between Ether and Ethereum?
Ans:
Ethereum is the blockchain network on which Ether is held and exchanged, whereas Ether can be used as a digital currency in financial transactions, as an investment, or as a store of value.
Q: How Does Ethereum Work?
Ans:
Ethereum, like all cryptocurrencies, is based on a blockchain network. A blockchain is a decentralised, distributed public ledger that verifies and records all transactions.
It's distributed in the sense that everyone on the Ethereum network has an identical copy of this ledger, which allows them to observe all previous transactions. It's decentralised in the sense that the network isn't run or maintained by a single entity, but rather by all of the distributed ledger owners.
Cryptography is used in blockchain transactions to keep the network safe and verify transactions. People use computers to "mine," or solve difficult mathematical equations that confirm each transaction on the network and add new blocks to the system's blockchain. Participants are given cryptocurrency tokens as a reward. These tokens are known as Ether (ETH) in the Ethereum system.
Ether, like Bitcoin, may be used to buy and sell goods and services.