Bitcoin Interview Questions
In this article, we test our knowledge of Bitcoin using 60 multiple-choice questions.
1. When was Bitcoin created?
(a) 2009
(b) 2007
(c) 2010
(d) 2020
Answer: (a)
Explanation: Bitcoin was created back in 2009 by Satoshi Nakamoto.
2. Who created Bitcoin
(a) Stuart Haber
(b) Vitalik Buterin
(c) Satoshi Nakamoto
(d) None of the above
Answer: (c)
Explanation: Bitcoin was introduced in 2009 by Satoshi Nakamoto through a research white paper called Bitcoin. We can find it here.
3. How are new Bitcoins introduced into circulation?
(a) Consensus
(b) Mining
(c) Validation
(d) All of the above
Answer: (b)
Explanation: Miners solve a PoW puzzle and are rewarded for their efforts, this process is referred to as mining. Currently, miners are paid 6.25 Bitcoins per block mined. This Bitcoin reward is halved after every four years(after every 210000 blocks). In Bitcoin, miners are paid after every 10 minutes.
4. What hashing function us used by Bitcoin for its hashing purposes?
(a) MD5
(b) SHA-256
(c) SHA-128
(d) SHA-512
Answer: (b)
Explanation: Bitcoin uses SHA-256 for its hashing needs. Hashing is a process of converting an arbitrary text into a fixed-length alphanumeric string.
5. How long does it take for a block to be mined in Bitcoin?
(a) 1 day
(b) 5 minutes
(c) 10 minutes
(d) 4 hours
Answer: (c)
Explanation: It takes about 10 minutes for miners to find a nonce that solves the PoW puzzle in Bitcoin. When the number of nodes reduces, so does the hashing power of the network, and this interval increases when the nodes increase so does the network hashing power and blocks get mined faster, a retargeting algorithm is used to maintain this interval to 10 minutes.
6. Where are Bitcoin servers located in the world?
(a) Russia
(b) US
(c) None of the above
(d) Germany
Answer: (c)
Explanation: Bitcoin servers are not located in a centralized location but rather are distributed across the globe, we can also start our own Bitcoin server right where we are.
7. In Bitcoin, how do miners receive their reward?
(a) Through the last transaction in a block
(b) It is sent to them by Bitcoin owners
(c) None of the above
(d) Through the coinbase transaction
Answer: (d)
Explanation: The coinbase transaction is not only used to reward miners for their efforts but is also used to pay them for processing transactions. This transaction is unique because it has no inputs. It is the first transaction in a block.
8. What is a mining pool?
(a) A group of miners who are rewarded for their efforts in maintaining the blockchain
(b) A group of miners who compete to mine the next block
(c) Miners who pool their computing power to solve the PoW puzzle the split the rewards for mining the block
(d) All of the above
Answer: (c)
Explanation: A mining pool is a group of miners who pool their computing resources to find the nonce that solves the network's puzzle and then contribute to the rewards plus transaction fees for mining the block
9. What is size of a Bitcoin block?
(a) 1 MB
(b) 10 MB
(c) 100 MB
(d) 1 GB
Answer: (a)
Explanation: A Bitcoin block is 1 MB in size. This limited size is one of the reasons Bitcoin cannot scale, other Bitcoin forks were created with a larger block size so that they could hold more transactions in a single block.
10. How many Bitcoins will ever exist?
(a) None of the above
(b) 20 Million
(c) 21 Billion
(d) 21 Million
Answer: (d)
Explanation: There will only be 21 million Bitcoins. This limited supply of Bitcoins is what makes Bitcoin valuable. The last Bitcoin will be mined in the year 2140.
11. When is the next Bitcoin halving?
(a) 2025
(b) 2024
(c) 2023
(d) 2022
Answer: (b)
Explanation: We expect the next Bitcoin halving to be on May 4, 2024. First, in 2009, the block reward was 50 Bitcoins, then 25, then 12.5 then in 2020 it became 6.25.
12. Currently what is the Bitcoin reward for mining a block?
(a) 50
(b) 12.5
(c) 25
(d) 6.25
Answer: (d)
Explanation: The current reward is 6.25 Bitcoins.
13. What will be the Bitcoin reward in 2024 when the next halving happens?
(a) 12.5
(b) 6.25
(c) 3.125
(d) 25
Answer: (c)
Explanation: The next halving will make the Bitcoin reward 3.125.
14. What amount of Bitcoins did Satoshi Nakamoto reward himself for mining the first Bitcoin?
(a) 50
(b) 25
(c) 12.5
(d) 6.25
Answer: (a)
Explanation: After mining the first block, Satoshi Nakamoto rewarded himself with 50 Bitcoins.
15. Who mined the Bitcoins Genesis Block?
(a) Random Bitcoin miners
(b) Satoshi Nakamoto
(c) All the above
(d) None of the above
Answer: (b)
Explanation: The genesis block is the first block in a blockchain. In Bitcoin, the first block was mined by the creator.
16. What is double-spending in Bitcoin?
(a) None of the above
(b) Sending Bitcoin to the same wallet
(c) Generating Bitcoins out of nowhere
(d) Trying to spend the same Bitcoins twice
Answer: (d)
Explanation: Double spending is spending the same digital asset twice.
17. In Bitcoin, what is used as an interface to the blockchain?
(a) Bitcoin account
(b) Bitcoin wallet
(c) Bitcoin username
(d) All the above.
Answer: (b)
Explanation: A Bitcoin wallet is the only interface that is used to interact with the Bitcoin blockchain. Bitcoin does not have accounts or usernames. It serves as a store of value and exchange of value.
18. How are transactions stored in a Bitcoin block?
(a) As a linked list
(b) In a list
(c) As a stack
(d) In a tree
Answer: (d)
Explanation: Transactions in a Bitcoin block are stored in a special tree referred to as a Merkle tree. This tree is a tree of transaction hashes with the root of the tree being the cumulative hashes of all transactions in the tree.
19. What type of tree is used to store transactions in a Bitcoin block?
(a) Red Black Tree
(b) AVL tree
(c) Merkle tree
(d) None of the above
Answer: (c)
Explanation: The Merkle tree stores Bitcoin transactions in a block.
20. What do the leaves of a Merkle tree consist of?
(a) A combination of the transaction and the block number
(b) Transaction hash
(c) The block header
(d) None of the above
Answer: (b)
Explanation: The Merkle tree has leaves which are the hashes of individual transactions. The root of this tree is the cumulative hashes of all transaction hashes in the tree.
21. What is difficulty adjustment in Bitcoin?
(a) None of the above
(b) Adjusting the PoS to keep block time to 10 minutes
(c) Adjusting the PoW to keep block time above 5 minutes
(d) Adjusting the PoW to keep block time to 10 minutes
Answer: (d)
Explanation: Difficulty adjustment involves adjusting the PoW to keep block generation to the 10-minute window. This is because miner joins and leave the network as they wish meaning the hash rate of the network decreases and increases meaning that this algorithm needs to keep the mining to a 10-minute interval.
22. What is transaction malleability in Bitcoin?
(a) The ability to reverse transactions in Bitcoin
(b) The ability of Bitcoin transactions to be immutable
(c) The ability of a Bitcoin transaction to be changed
(d) The ability to send a transaction to two people if both of them agree
Answer: (c)
Explanation: The transaction malleability problem is a vulnerability in Bitcoin that is exploited by changing a cryptographic hash, such as the digital signature that identifies a cryptocurrency transaction.
23. What is transaction locktime?
(a) The latest time a transaction can be mined into a block
(b) The earliest time a transaction can be mined into a block
(c) The time a transaction can be executed
(d) Time is taken for a transaction to be confirmed
Answer: (b)
Explanation: Lock time is the earliest time a transaction can be mined in a block.
24. How do miners choose what transaction goes into the next block?
(a) Selecting transactions with the highest fees
(b) Selecting randomly from the transaction pool
(c) A balance between its age and size and high fees
(d) The first to arrive in the first to be processed
Answer: (c)
Explanation: Transactions are prioritized based on the age of the UTXO being spent in their inputs. Old transactions with high-value inputs are prioritized over newer ones with smaller inputs.
25. What are BIPs in Bitcoin?
(a) None of the above
(b) Bitcoin initial protocols
(c) Bitcoin improvement protocols
(d) Bitcoin improvement proposal
Answer: (c)
Explanation: BIPs are formal proposals to change the Bitcoin protocol. Participants can pitch their thoughts on how they think Bitcoin should be changed after which the community votes for or against it.
26. How many blocks are needed before a generation transaction is released?
(a) 100
(b) 10
(c) 6
(d) 50
Answer: (a)
Explanation: After 100 blocks the coinbase transaction is stable enough such that the newly mined bitcoins can be spent by the miner.
27. What is a block in Bitcoin?
(a) A chain of links
(b) A collection of miners
(c) A data structure storing all miner's addresses
(d) A collection of transactions
Answer: (d)
Explanation: A Bitcoin block stores all transactions, therefore it is a set of transactions on the blockchain.
28. What is a vanity address in Bitcoin?
(a) A randomized address that cannot be traced back to the sender
(b) A public address that has value because of the characters used
(c) An address masking the receiver's true identity
(d) None of the above
Answer: (b)
Explanation: A vanity address is a Bitcoin address with specific starting letters that spell out words such as a name or a brand. This makes it easier for Bitcoin senders to recognize an address.
29. Bitcoin payments are easier to make compared to credit or debit card payments?
(a) All of the above
(b) False
(c) None of the above
(d) True
Answer: (d)
Explanation: Bitcoin payments are easier and safer since all that is needed is a wallet address. Also, no information can be stolen over insecure networks compared to credit card or debit card payments.
30. Which is NOT a way one can acquire Bitcoins?
(a) Peer to Peer exchange
(b) As payment for goods and services
(c) Exchanging cash for Bitcoins at a bank
(d) Mining
Answer: (c)
Explanation: Bitcoin is a peer-to-peer system meaning that no intermediary is needed at any point.
31. Which among the following is NOT and advantage of Bitcoin?
(a) Fixed transaction fees
(b) Payment freedom
(c) Security
(d) Transparency
Answer: (a)
Explanation: With Bitcoin, we can choose how much fees we want to pay for a transaction.
32. What organization governs Bitcoin?
(a) Google
(b) Facebook
(c) Miners Association
(d) None of the above
Answer: (d)
Explanation: Bitcoin is governed by all participants of the peer-to-peer network and not a single organization.
33. What is a factor why we should NOT trust Bitcoin.
(a) Faith in numbers
(b) Encryption and Cryptography
(c) Mathematical algorithms
(d) None of the above
Answer: (d)
Explanation: People trust Bitcoin because is built using advanced mathematical algorithms, strong encryption, and cryptography and it is decentralized and managed by the people.
34. What is a hard limit in Bitcoin?
(a) The total number of Bitcoins in circulation
(b) The maximum amount of Bitcoins one can spend.
(c) The maximum of Bitcoins that can be mined in a day.
(d) None of the above
Answer: (a)
Explanation: Answer explanation goes here. Only works with HTML
35. What is NOT a common use case of Bitcoin?
(a) Setting up wills
(b) Futures markets
(c) None of the above
(d) Setting up trust funds
Answer: (c)
Explanation: Bitcoin can be used in all mentioned cases above.
36. What is an unconfirmed transaction in Bitcoin?
(a) A transaction in a mining pool.
(b) An incomplete transaction that is not included in a block.
(c) An invalid transaction
(d) A valid transaction is included in a block.
Answer: (b)
Explanation: An unconfirmed transaction is a transaction that has not yet been included in a block.
37. Which among the reasons is NOT a cause for unconfirmed transactions?
(a) Delayed verification
(b) Invalid inputs
(c) Lee transaction fees
(d) None of the above
Answer: (b)
Explanation: A transaction remains unconfirmed either because the fees are low or because there is delayed verification by miners.
38. All blocks link to the previous block except for the ____ block.
(a) Second
(b) First
(c) Last
(d) None of the above
Answer: (b)
Explanation: The genesis block does not have a link to the previous block since there is no previous block to it. It is the block that starts the blockchain and all other blocks use it as the root of trust.
39. How many central servers does Bitcoin have world wide?
(a) 0
(b) Over 1 Million
(c) Over 100,000
(d) Over 500,000
Answer: (a)
Explanation: Bitcoin is decentralized and therefore there are no central servers.
40. What is a problem with traditional financial systems?
(a) High transaction fees
(b) Lack transparency
(c) All the above
(d) Transactions can be changed
Answer: (c)
Explanation: Traditional financial systems lack transparency, impose high fees for processing transactions, and can be hacked or transactions can be intentionally changed.
41. Which of the statements best describes a blockchain?
(a) A distributed ledger on a P2P network
(b) A decentralized database on a central network
(c) A cryptocurrency
(d) A chain of blocks on a network
Answer: (a)
Explanation: A blockchain is a distributed ledger on a peer-to-peer network.
42. What makes Bitcoin secure?
(a) Insuarance companies
(b) Cryptograhic Mathematics and Algorithms
(c) Financial institutions
(d) None of the above
Answer: (b)
Explanation: Bitcoin is difficult to hack because of the cryptographic mathematical concepts and algorithms used.
43. What was the first Bitcoin purchase that made it valuable?
(a) More Bitcoin
(b) Air ticket
(c) Burger
(d) Pizza
Answer: (d)
Explanation: On May 22, 2010, Laszlo Hanyecz from Florida used Bitcoins to buy two pizzas from a local pizza store.
44. What is Bitcoin?
(a) Encrypted currency in a specific state
(b) A currency for hackers
(c) A type of digital currency
(d) None of the above
Answer: (c)
Explanation: Bitcoin is one of the many cryptocurrencies that exist.
45. What is a key feature for the functioning of cryptocurrency?
(a) The absence of a centralized authority
(b) Reliability
(c) It is based on machine learning
(d) It is anonymous
Answer: (a)
Explanation: Decentralization is one of the core principles of cryptocurrency.
46. How is cryptocurrency stored?
(a) In the form of golden coins
(b) As encrypted data on many distributed computers.
(c) In the form of paper money
(d) As encrypted data on an app
Answer: (b)
Explanation: Cryptocurrency is stored as encrypted data on many distributed computers around the globe.
47. What happened when James Howells mined Bitcoin in the early days?
(a) He bought a pizza
(b) He donated them to charity
(c) He created 10000 Bitcoins, deemed them useless, and thew away the hard drive
(d) He ended up with 7000 Bitcoins, deemed them useless, and threw away the hard drive
Answer: (d)
Explanation: James Howells threw away 7000 Bitcoins which at the moment of this writing is worth about $200 million.
48. What cryptocurrency was the most valuable by the end of 2017?
(a) Bitcoin
(b) Ethereum
(c) Dash coin
(d) Dodge coin
Answer: (a)
Explanation: Bitcoin was the most valuable coin by the end of 2017.
49. Can data be modified once written on a public blockchain?
(a) All the above
(b) True
(c) False
(d) None of the above
Answer: (c)
Explanation: The blockchain is immutable and therefore once data is written, it can never be erased.
50. Which is the LEAST safe place to store Bitcoins?
(a) In a hot wallet
(b) In a bank deposit box
(c) On an exchange
(d) In a cold wallet
Answer: (c)
Explanation: An exchange is a third party and therefore storing cryptocurrency on an exchange is no different from storing cash in a bank. The exchange can decide to change the amount or wipe it all together. Also, it is not anonymous since they have all your personal details.
51. When did blockchain technology emerge?
(a) 2009
(b) 2008
(c) 2010
(d) 2011
Answer: (b)
Explanation: Blockchain was first introduced in 2008.
52. What was the main reason blockchain was created?
(a) Smart cities
(b) Peer-to-peer payments
(c) Anonymous payments
(d) None of the above
Answer: (c)
Explanation: Initially blockchain was intended to be used for making anonymous payments.
53. Which is NOT a Bitcoin fork?
(a) None of the above
(b) Bitcoin Cash
(c) Bitcoin XT
(d) Bitcoin SV
Answer: (a)
Explanation: All the above are forks of Bitcoin.
54. What companies accept Bitcoin payments?
(a) Paypal
(b) Microsoft
(c) Overstock
(d) All the above
Answer: (d)
Explanation: All the above companies accept Bitcoins as a form of payment.
55. What contributes to Bitcoin's high availability?
(a) Decentralization
(b) Transparency
(c) Security
(d) Cryptography
Answer: (a)
Explanation: Decentralization ensures the Bitcoin network is running 24/7.
56. A Bitcoin block can never have more than a single-parent block?
(a) All the above
(b) False
(c) True
(d) None of the above
Answer: (c)
Explanation: A block in Bitcoin cannot have more than a single parent block, including a block generated from a chain split.
57. Coins on the Bitcoin blockchain are secured using a ____
(a) Paraphase
(b) Public key
(c) Wallet address
(d) Private key
Answer: (d)
Explanation: Private keys are used to secure bitcoins on the Bitcoin network. Note that this key is what Bitcoin owners use to access funds stored on the blockchain. Private keys are stored in crypto wallets.
58. What is the hashing algorithm used by Bitcoin?
(a) SHA-128
(b) SHA-256
(c) Keccack
(d) MD5
Answer: (b)
Explanation: Bitcoin uses the SHA-256 hashing algorithm. Hashing and public-key cryptography are what make Bitcoin trusted and secure.
59. Bitcoin is a ____ blockchain.
(a) Public
(b) Private
(c) Proprietery
(d) Permisioned
Answer: (a)
Explanation: Bitcoin is a public blockchain accessible to anyone. Anyone can join and leave the network as they wish.
60. How may Bitcoin transactions can a Bitcoin block hold?
(a) Over 4000
(b) Over 3000
(c) Over 2000
(d) Non of the above
Answer: (c)
Explanation: Bitcoin's block is 1 MB and can store over 2000 transactions. Transactions in a block can be of different sizes therefore this number may vary. Many large-size transactions result in fewer transactions in a block and many small-size transactions result in more transactions in a block.