Fundamental Concepts and Working Principles of Blockchain Technology BFC Practice Questions (Page 6)

Questions 26–30

1. 26foundation · easy

   What is the primary function of a consensus mechanism in a blockchain?

   • ATo encrypt all transactions before they are broadcast to the network
   • BTo store transaction data in a centralized database
   • CTo create new cryptocurrency tokens for miners
   • DTo enable network participants to agree on the valid state of the ledger
   Reveal Solution Discussion Select an answer first
2. 27foundation · easy

   Which statement best describes a blockchain?

   • AA cryptographic algorithm used to encrypt all data in a network
   • BA type of distributed ledger that records transactions in blocks linked by cryptographic hashes
   • CA centralized database that stores transaction records in a single server
   • DA peer-to-peer network that only transfers cryptocurrencies
   Reveal Solution Discussion Select an answer first
4. 28expert · hard

   A decentralized finance (DeFi) protocol is planning to launch a smart contract that automatically rebalances a portfolio of tokens based on price feeds. The team is debating how to handle the external price data. Which approach best balances security and decentralization?

   • ALet users submit price data and use the median as the official price
   • BUse a decentralized oracle network that aggregates data from multiple independent sources
   • CHardcode the price data into the smart contract and update it manually each day
   • DUse a single centralized API for price data to simplify integration
   Reveal Solution Discussion Select an answer first
5. 29application · medium

   A consortium of insurance companies wants to use a blockchain to record claims and payouts. The participants are known and trusted, but they need to prevent any single member from unilaterally approving transactions. The system should be energy-efficient and provide fast finality. Which consensus mechanism is most appropriate?

   • AProof of Work (PoW), requiring all members to compete in solving cryptographic puzzles.
   • BProof of Authority (PoA), where a set of approved validators takes turns proposing blocks.
   • CA simple majority vote among all employees of each member company.
   • DProof of Stake (PoS) with a public token that anyone can buy to become a validator.
   Reveal Solution Discussion Select an answer first
6. 30application · medium

   A developer is explaining to a client how a blockchain records transactions. The client asks why each block contains the hash of the previous block. What is the primary reason?

   • ATo create a tamper-evident link between blocks, so that changing any block would break the chain.
   • BTo reduce the size of the blockchain by eliminating duplicate data.
   • CTo allow blocks to be stored in any order without affecting integrity.
   • DTo encrypt the transactions inside the block.
   Reveal Solution Discussion Select an answer first