BLOCKCHAIN INTERVIEW QUESTIONS PART 1 - what problem does blockchain solve

What is a distributed ledger?

·         A distributed ledger is a type of database that is shared, replicated, and synchronized among the members of a decentralized network. 

·         The distributed ledger records the transactions, such as the exchange of assets or data, among the participants in the network.

·         Participants in the network govern and agree by consensus on the updates to the records in the ledger. 

·         No central authority or third-party mediator, such as a financial institution or clearinghouse, is involved.

·         Every record in the distributed ledger has a timestamp and unique cryptographic signature, thus making the ledger an auditable, immutable history of all transactions in the network.

The role of business ledgers

Business networks typically come together at marketplaces where the participants, such as

·         producers,

·         consumers,

·         suppliers,

·         partners,

·         market makers/enablers, and

·         other stakeholders

own, control, and exercise their rights, privileges, and entitlements on objects of value known as assets.

Tangible and physical assets

·         Car

·         Home

 Intangible and virtual assets

·         Deeds

·         Patents

·         Stock certificates

Asset ownership and transfers are the transactions that create value in a business network.

Problems with current business ledgers

Current business ledgers in use today are deficient in many ways. They are

·         inefficient,

·         costly,

·         subject to misuse and tampering.

·         Lack of transparency, as well as

·         susceptibility to corruption and fraud

These risks and uncertainties contribute to missed business opportunities.

What is blockchain, exactly?

A blockchain is a

·         tamper-evident,

·         shared digital ledger

that records transactions in a public or private peer-to-peer network.

Distributed to all member nodes in the network, the ledger permanently records, in a sequential chain of cryptographic hash-linked blocks,

All the confirmed and validated transaction blocks are linked and chained from the beginning of the chain to the most current block, hence the name blockchain.

Blockchain is the digital and decentralized ledger technology that records all transactions without the need for a financial intermediary like a bank.