Can You explain the components of Blockchain Ecosystem Crypto

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Can You explain the components of Blockchain Ecosystem?- Crypto

In this Blockchain interview questions , I have collected the most frequently asked questions by interviewers. These questions are collected after consulting with top industry experts in the field of Blockchain & related technologies.

Asked On2022-01-09 07:28:25 by:Akhil-Dev-D

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Answer: The important logical blockchain components are as follows:

Node Application

Distributed ledger

Consensus algorithms

VM or virtual machine

1. Node Application

The node application is one of the first additions among blockchain ecosystem components. It is a particular application that every internet-connected computer must download for participating in a blockchain ecosystem. After the installation of the node application, a user becomes a participant in the blockchain network. For example, if you consider Bitcoin as a blockchain ecosystem, every computer connected to the internet should run a Bitcoin wallet application for participating in the blockchain network.

Similarly, another example of a blockchain ecosystem, Bankchain, shows how banks only get permission for running the node ecosystem. This presents a stark contrast from the Bitcoin ecosystem, where any individual could ensuring downloading and installation of the node application for participating in the network.

In technical terms, the blockchain ecosystem follows the design and rules of a Service Overlay Network or SON. So, blockchain components like node applications should follow certain conditions. The computer must feature an application that could influence the shared state in the Service Overlay Network. Only then you could have it classified as a node in the concerned network.

2. Distributed Ledger

The next addition among logical components of blockchain ecosystem would obviously point to the distributed ledger. Before diving into the meaning of distributed ledger, let us focus on the definition of a ledger. A ledger actually refers to any file, generally computer files, which document the data and transactions of each user.

So, the distributed ledger is basically a ledger that you can find distributed across all nodes in the network. It is a shared database that is replicated and synchronized across all peers in the network. However, the most striking feature in this answer to ‘what are the components of blockchain’ refers to decentralization.

Decentralization is capable of serving one of the most crucial advantages for users. Updating the ledger would encourage each node in the network to develop the transaction. Subsequently, they can arrive at an agreement regarding the correctness of the concerned copy of the ledger they have.

Once all the nodes in the network agree on the correctness of the transaction, the nodes would update their existing ledger with the new copy. Interestingly, each record in the distributed ledger comes with a timestamp as well as a unique cryptographic signature. As a result, it can ensure better traceability alongside the safety of the ledger from unauthorized tampering.

3. Consensus Algorithms

Another dominant addition among key elements of blockchain ecosystem would obviously refer to consensus algorithms. Blockchain technology runs on the claim of completely verified and highly secure transactions. While many would be quick to assume that decentralization helps in offering this advantage, the actual agents responsible for the verification of transactions are consensus algorithms.

Consensus algorithms are basic processes in computer science that can help in achieving agreement regarding certain topics among distributed systems. The role of consensus algorithms in the blockchain ecosystem largely focuses on achieving reliability in a multiple-node blockchain network.

As a result, it can ensure that all incoming blocks in the network have been verified and offer security. Most important of all, you could find various consensus algorithms for defining one of the crucial blockchain components.

Here are the different types of consensus algorithms you may come across in a blockchain ecosystem –

1. Proof of Work

Proof of Work consensus algorithm is probably one of the first implementations of a consensus algorithm. It is an extremely functional tool among blockchain ecosystem components for processing blocks and adding them to the network.

The correctness of a block matter significantly in ensuring its addition to the network. So, the process of developing the correct proofs for adding a block to the ecosystem is referred to as mining. Therefore, the addition of a block to the blockchain requires miners to solve cryptographic puzzles in the Proof of Work algorithm.

2. Proof of Stake

Another notable consensus algorithm that has evolved from Proof of Work refers to the Proof of Stake algorithm. Proof of Stake algorithm is one of the key elements of blockchain ecosystem, especially considering its radically growing popularity. In this algorithm, participants capable of generating blocks are selected in accordance with specific criteria set in the algorithm.

The participants capable of generating blocks are referred to as validators. The criteria for the selection of validators focuses on the economic stake of the validator in the blockchain network. For example, if a participant has a lot of coins, they would get to validate transactions on the blockchain network.

The possibility of selection of a validator depends considerably on their computing power and number of coins. So, users who have held coins for longer periods are more likely to assume the role of validators according to the Proof of Stake algorithm.

4. Virtual Machine

The final addition among logical components of blockchain ecosystem points out to the virtual machine. The virtual machine or VM implementation in the blockchain ecosystem happens alongside the node application. It is important to note that the virtual machine is basically a virtual representation of an actual computer with related resources.

One of the notable mentions of virtual machines as components of the blockchain ecosystem is evident in the Ethereum blockchain ecosystem. The Ethereum Virtual Machine or EVM, which resides in the node application, showcases the perfect example of a VM component in blockchain ecosystems.

EVM could showcase how valuable blockchain ecosystem components are for understanding instructions to manage states of digital smart contracts. In addition, the EVM in the node application ensures the enforcement of the terms and conditions of the contract.

Answerd on:2022-01-09 Answerd By:AanchalKumari

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Answer: The important logical blockchain components are as follows:

Node Application

Distributed ledger

Consensus algorithms

VM or virtual machine

1. Node Application

2. Distributed Ledger

3. Consensus Algorithms

Here are the different types of consensus algorithms you may come across in a blockchain ecosystem –

1. Proof of Work

2. Proof of Stake

4. Virtual Machine

Answerd on:2022-01-09 Answerd By:AanchalKumari

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Can You explain the components of Blockchain Ecosystem?- Crypto

In this Blockchain interview questions , I have collected the most frequently asked questions by interviewers. These questions are collected after consulting with top industry experts in the field of Blockchain & related technologies.

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