09 Blockchain

Question 1

block chain process: start

Answer 1

1. user initiates transaction
2. transaction encrypted with digital signature
3. transaction broadcasted
   - some nodes may not receive
   - some nodes may receive but not process

Question 2

block chain process: chain

Answer 2

1. one block contains 0 or some transactions
2. transaction fee is used to motivate blocks/nodes to include your transaction
3. nodes compete to add a new block to the chain
   - has to be accepted by the other nodes

Question 3

what is a full node

Answer 3

1. holds a copy of the whole chain
2. will not require much storage as data is hashed and stored
3. SHA-256
   - no matter what data, output is always 256 bits

Question 4

what is a genesis block

Answer 4

first block of the chain

Question 5

rewards

Answer 5

beginning stages: new block reward

later stages: transaction fees

Question 6

what is nonce

Answer 6

1. maintain high entry threshold for right to add block
2. nonce = first n bits to be set to 0 for hashed value
   - controls difficulty level
   - keeps calculating new hash till requirement is satisfied (mining)
   - since bits have 50% chances, probability = 1/2^n
3. once valid nonce is calculated, broadcast to all nodes
4. most accepted will be added to the block
5. miner who added the block will receive transaction fee and block reward

Question 7

proof of work

Answer 7

1. verifying that nonce is valid
2. hard to calculate but easy to verify
3. if more than one valid nonce, chain will fork
   - follow longest chain rule