Saturday, May 19, 2018

BLOCKCHAIN INTERVIEW QUESTIONS PART 2 - How does a blockchain network work

How does a blockchain network work?

Instead of relying on a third party, such as a financial institution, to mediate transactions, member nodes in a blockchain network use a consensus protocol to agree on ledger content, and cryptographic hashes and digital signatures to ensure the integrity of transactions.

Consensus ensures that the shared ledgers are exact copies, and lowers the risk of fraudulent transactions, because tampering would have to occur across many places at exactly the same time.

Cryptographic hashes, such as the SHA256 computational algorithm, ensure that any alteration to transaction input — even the most minimal change — results in a different hash value being computed, which indicates potentially compromised transaction input.

Digital signatures ensure that transactions originated from senders (signed with private keys) and not imposters.

The decentralized peer-to-peer blockchain network prevents any single participant or group of participants from controlling the underlying infrastructure or undermining the entire system.


Participants in the network are all equal, adhering to the same protocols. They can be individuals, state actors, organizations, or a combination of all these types of participants.

How blocks are added to the chain?

1.      A cryptographic puzzle must be solved thus creating the block.
2.      The computer that solves the puzzle shares the solution to all the other computers on the network. That is called proof-of-work.
3.      The network verifies the proof-of-work.
4.      If correct the block will be added to the chain  






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