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Ethereum Multiple Choice Questions [for Interviews]

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In this article, we test our understanding of Ethereum with 60 multiple choice questions.

1. Which year was Blockchain technology created?
(a) 2008.
(b) 2009.
(c) 2010.
(d) 2015.

Ans: (a)
Explanation: Blockchain or blockchain-like technology was first proposed by a cryptographer (David Chaum) in 1982 in a dessertation. In 2008 the first application of blockchain technology was seen in a proposal for the Bitcoin blockchain system. Satoshi Nakamoto improved on the concept by introducing a consensus mechanism(proof-of-work) which is what keeps the Bitcoin blockchain secure.
The original idea behind a blockchain was to have a tamper-proof system

2. Which year was Ethereum created?
(a) 2017.
(b) 2018.
(c) 2015.
(d) 2020.

Ans: (c)
Explanation: The Ethereum blockchain network was conceived in 2013 by Vitalik Buterin and other founders such as Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. Unlike Bitcoin, Ethereum was crowdfunded project that allowed developers to deploy decentralized applications.

3. Who is NOT a founder of Ethereum?
(a) Satoshi Nakamoto
(b) Vitalik Buterin
(c) Gavin Wood
(d) Charles Hoskinson

Ans: (a)
Explanation: Satoshi Nakamoto was the creator of the Bitcoin network and NOT Ethereum.
Ethereum was published in a white paper by Vitalik Buterin. It proposed a turing-complete blockchain whose functionalities could extend beyond the exchange and store of value. The rest of the founders including Anthony Di Iorio(financer) later joined in the project to create Ethereum.

4. How many minutes does it take to mine an Ethereum block?
(a) 0
(b) 10
(c) 30
(d) 12

Ans: (a)
Explanation: An Ethereum block is mined in less than a minute. Around 12 to 14 seconds a new Ethereum block is mined depending on the network traffic, hashing power, and difficulty, among other factors. In a proof-of-work consensus mechanism, miners use computational resources to solve a cryptographic puzzle.

5. Select the consensus algorithm used by Ethereum's PoW mechanism?
(a) Dagger Hashimoto
(b) Ethash
(c) Etchash
(d) SHA256 algorithm

Ans: (b)
Explanation: Ethash is the proof-of-work mining algorithm that is used by the Ethereum blockchain network.
Etchash and Ethash are modifications of the Dagger Hashimoto algorithm. The former is used by Ethereum and the latter is used by Ethereum Classic - a hard fork of Ethereum caused by the DAO hack.
At first, Ethash was meant to decentralize the network by preventing mining domination by ASCI miners however there was a workaround and manufacturers were able to integrate the algorithm inside ASCI chips. To counter this, Ethereum moved to the proof-of-stake consensus mechanism where mining is inapplicable.

6. Satoshis is to Bitcoin as ____ is to Ethereum?
(a) Gwei
(b) Wei
(c) Ether
(d) Bitcoin

Ans: (b)
Explanation: Wei is the smallest denomination of Ethereum. On the other hand, Satoshis is the smallest denomination of Bitcoin.
Ethereum denominations are as follows;
Wei β€” 1 Wei β€” 1
Kwei (babbage) β€” 1e3 wei β€” 1,000
Mwei (lovelace) β€” 1e6 wei β€” 1,000,000
Gwei (shannon) β€” 1e9 wei β€” 1,000,000,000
Microether (szabo) β€” 1e12 wei β€” 1,000,000,000,000
Milliether (finney) β€” 1e15 wei β€” 1,000,000,000,000,000
Ether (ETH) β€” 1e18 wei β€” 1,000,000,000,000,000,000

7. In 2022 what is the block reward issued to miners as a result of mining Ethereum blocks.?
(a) 2
(b) 3
(c) 6
(d) 10

Ans: (a)
Explanation: In 2022, Ethereum miners are rewarded 2 Ether for every block mined. After the merge on August 10, 2022, Ethereum will undergo a triple halving. Halving is whereby the cryptocurrency reward for miners for mining blocks is halved after a period of time so the economics make sense. For example, when Bitcoin was released, Satoshi Nakamoto rewarded self with 50BTC, four years later, the reward was 25 then 12.5, and so on. For Ethereum, it was first 5 ETH in 2017 then 3 and now it is 2ETH per block mined.
In a proof-of-stake system, validators(who've staked native ETH coins) secure the network, in a proof-of-work system miners(who stake computational resources) secure the network. This way if either misbehaves, they lose something.
Triple halving is the phenomenon where we have three factors that will drive down ETH mining reward and finally halt mining for Ethereum. First, validators don't need computational resources to mine ETH. Secondly, the EIP-1599 fee burn led to gas fees being burned instead of being distributed among validators or miners, finally, post-merge for validators to be rewarded they have to stake coins to mine the next block. This works on decentralizing Ethereum more and more.

8. What is the Ghost protocol in Ethereum?
(a) A way of processing transactions without broadcasting them.
(b) A way of rewarding miners for mining Ethereum blocks.
(c) None of the above.
(d) A way of paying miners for mining broadcasted transactions.

Ans: (c)
Explanation: The GHOST(Greedy Heaviest Observed SubTree) is a protocol that was designed to keep Ethereum secure by rewarding uncle and nephew blocks. Remember when two competing miners solve the puzzle near similar times then a fork is created, to reduce forks, the GHOST protocol was created. more information

9. Which among the following is a difference between Bitcoin and Ethereum?
(a) Ethereum uses PoS while Bitcoin uses PoW.
(b) Bitcoin scrypt is turing-complete while Ethereum's Solidity is turing-incomplete.
(c) Ethereum is more accepted compared to Bitcoin.
(d) Ethereum is deflationary while Bitcoin is inflationary.

Ans: (b)
Explanation: Scrypt is turing-complete for security purposes while Ethereum's Solidity is turing-incomplete. The former does not have looping capabilities therefore we know that there is no chance of infinite loops, and the latter(solidity/Vyper) has looping functionality. To handle the issues involving infinite loops, Ethereum uses the concept of gas and gas fees.

10. When was Ethereum's genesis block mined?
(a) 2013
(b) 2015
(c) 2018
(d) 2009

Ans: (b)
Explanation: The first block to be mined in a blockchain network is referred to as the genesis block. It is the root of trust for the Entire blockchain network.
For a system to be secure a root of trust must be established. Think of an onion and the layers one has to go through to reach the centermost layer. Blockchains implement a similar concept in their security mechanism in that each layer/block shapes upon a more trusted inner layer using access control, cryptography, hashing, and encryption among other security primitives. For example, the entire Bitcoin blockchain uses the genesis block mined by Satoshi Nakamoto as the root of trust.

11. What is gas in the Ethereum context?
(a) The computational resources required to perform transactions.
(b) The security level of the Ethereum network.
(c) The gas produced by Ethereum servers.
(d) The required cost to perform a transaction on the network.

Ans: (d)
Explanation: Gas is the price for performing a transaction on the Ethereum network. Miners contribute their computational resources to manage the network and in return are incentivized with gas fees paid by the transaction initiator.

12. What are ommer blocks in Ethereum?
(a) Unwanted mined Ethereum blocks.
(b) Blocks created during the PoW competition that did not get selected.
(c) Blocks that have already been mined and added to the blockchain.
(d) None of the above.

Ans: (b)
Explanation: Ommer blocks are created when two miners mine the next block at the same time. In such a case, a single block will be added to the ledger, the remaining blocks are referred to as ommer blocks.

13. What are ommer rewards blocks in Ethereum?
(a) Rewards to miners for creating ommer blocks.
(b) Reward to miners for creating Ethereum blocks.
(c) Reward to miners for processing transactions from Uncle blocks.
(d) Reward to miners for network participation.

Ans: (a)
Explanation: In Ethereum when two competing miners mine a block at roughly the same time, a single block is selected and the rest are referred to as ommer blocks. Ommer miners are also incentivized to improve the security of the network.

14. What are uncle blocks in Ethereum?
(a) Blocks that are roughly mined at similar times.
(b) Valid blocks rejected by the network in Ethereum.
(c) Blocks from another blockchain such as Bitcoin.
(d) None of the above.

Ans: (b)
Explanation: Uncle blocks are valid blocks that have been rejected by the Ethereum network. These blocks are not mined onto the canonical chain. The GHOST protocol was proposed to reward miners who mine uncle blocks.

15. Which statement best describes Ethereum?
(a) A Bitcoin clone with programmability.
(b) A server company located in the US.
(c) A cryptocurrency derived from Bitcoin.
(d) A distributed computer with a Native currency.

Ans: (d)
Explanation: Ethereum is a distributed computer system with its native currency referred to as Ether. Reading the state of the world computer is free however changing the state costs gas fees since computations need to be performed.

16. What are uncle rewards in Ethereum?
(a) Rewards are awarded to miners who create an uncle block included in a side chain.
(b) Rewards are awarded to miners who create a valid block included in a valid block added to the chain.
(c) Rewards awarded to miners who create an ommer block included in a valid block added to the chain.
(d) Rewards are awarded to miners who create an uncle block included in a valid block added to the chain.

Ans: (d)
Explanation: Uncle rewards are rewards that are rewarded to miners who create uncle blocks that are included in a valid block that is added to the canonical network.

17. During the conception of Ethereum, how many Ether existed?
(a) 21 million
(b) 21 billion
(c) 71 million
(d) 72 million

Ans: (d)
Explanation: At launch, 72 million Ether were generated. 21 million represent the total Bitcoin that will ever exist in circulation unless we can change the root of trust and its subsequent blocks(entire network) or at least 51% which is almost impossible.

18. What is a difference between Ethereum and Bitcoin?
(a) Ethereum was crowdfunded, Bitcoin was not.
(b) Bitcoin was crowdfunded, Ethereum was not.
(c) None of the above.
(d) All of the above.

Ans: (a)
Explanation: Ethereum is a crowd-funded project while Bitcoin is not. Ethereum's crowd sale was the largest crowd-funded campaign.
A crowd sale in the crypto world is a public offering to invest in a digital asset. This could be an NFT, a blockchain, a decentralized application on a blockchain, a native cryptocurrency, or a token. The main purpose of crowdsales is to raise funds for the development of the project or business venture.

19. Ethereum is a ____ blockchain?
(a) Public.
(b) Private.
(c) Consortium.
(d) None of the above.

Ans: (a)
Explanation: Ethereum is a public blockchain that is accessible to anyone.
The major blockchain categories are permissioned and permissionless. The latter allows anyone to join or leave. These are fully decentralized and transparent. In addition to this, the platform is open source.
Permissioned on the other hand is closed and open to specific people. They are commonly used in applications where data security is a priority. These are developed for private use by organizations. Also, they are not fully decentralized.
We also have hybrid blockchains which are a mix of both permissioned and permissionless blockchains.
Another type of blockchain is a consortium blockchain. It is a blockchain that has permissioned and permissionless parts. Here we can have multiple organizations managing the blockchain.

20. What is Ether?
(a) A cryptocurrency invented by Satoshi Nakamoto.
(b) The fiat version of Ethereum crypto-currency.
(c) The lowest denomination of Ethereum native currency.
(d) None of the above.

Ans: (d)
Explanation: Ether is the native cryptocurrency for the Ethereum blockchain network.

21. When was Ethereum's White paper published?
(a) 2015
(b) 2008
(c) 2014
(d) 2009

Ans: (c)
Explanation: The Ethereum whitepaper was published in 2014. It proposed Ethereum as a peer-to-peer blockchain network. For more information, this link is helpful.

22. How many transactions per second could Ethereum process in January 2016?
(a) 25
(b) 10000
(c) 100
(d) 50

Ans: (a)
Explanation: After its release in 2015, Ethereum could process 25 transactions per second by 2016 January. At the writing of this MCQ, Ethereum can process 100,000 transactions per second.

23. How many hexadecimal characters does an Ethereum address have?
(a) 30
(b) 20
(c) 40
(d) 60

Ans: (c)
Explanation: An Ethereum is composed of 40 hexadecimal characters, unlike Bitcoin addresses which consist of 27 to 35 alphanumeric characters.
Addresses have a '0x' prefix concatenated at the rightmost 20 bytes of a keccack-256 hash of the ECDSA public key. An Ethereum address is 20 bytes. Why 20? Two digits represent a byte and we have 40 characters.

24. Which is NOT a type of Ethereum address?
(a) Externally Owned Address.
(b) Contract Address.
(c) Receiving Address.
(d) None of the above.

Ans: (c)
Explanation: We can have two types of Ethereum addresses. An Externally Owned Address of Contract Address. EOAs are addresses that are owned by Ethereum users. They can receive and send ETH. They have private keys that are used to sign transactions.
Contract addresses are addresses for smart contracts for example the Uniswap contract is at https://etherscan.io/token/0x1f9840a85d5af5bf1d1762f925bdaddc4201f984. The contract address is 0x1f9840a85d5af5bf1d1762f925bdaddc4201f984.

25. Select the fork that will introduce Ethereum 2.0?
(a) Metropolis
(b) Altair
(c) Serenity
(d) Classic

Ans: (c)
Explanation: Serenity is meant to make Ethereum more scalable, resilient, secure, and decentralized.
Altair fork added support for "sync committees". This allowed light clients, brought validator inactivity and slashed penalties up to their full values.
Metropolis is the third phase in Ethereum’s four-stage development map. Its purpose was to make the platform more secure and scalable.
more information

26. What is Ethereum Classic?
(a) An Ethereum hard fork.
(b) A Bitcoin hard fork.
(c) A Bitcoin soft fork.
(d) An Etherum soft fork.

Ans: (a)
Explanation: A hard fork is a radical change to a network's protocol. This is what happened to Ethereum after the DAO hack.
Ethereum DAO raised USD 150 million worth of Ether through the crowd sale. Due to vulnerabilities found in the codebase, 3.6 million was drained from the contract and sent to the hacker's wallet address. To restore stolen funds, Ethereum was hard forked. Due to different views, some decided to stay on Ethereum Classic(the old DAO).

27. Which is NOT a security primitive in blockchains such as Bitcoin and Ethereum?
(a) hashing
(b) Certificates and Certificate Authorities.
(c) encryption
(d) Public-key cryptography

Ans: (b), (c)
Explanation: Blockchains such as Ethereum and Bitcoin are secured by security primitives such as hashing, the use of digital signatures, hash chains, and public-key cryptography. Encryption is applicable to permissioned blockchains where information security is a priority however on public blockchains, all data is public therefore there is no need of encrypting it from attackers.

28. Why do we have Ethereum and Ethereum Classic?
(a) As a result of a hack.
(b) To scale the Ethereum blockchain.
(c) None of the above.
(d) All of the above.

Ans: (a)
Explanation: The fork came as a result of a DAO hack whereby a hacker managed to withdraw $3.6 million(1/3 all circulating ETH) from the DAO wallet to a hacker's wallet. This led to Ethereum creating a hard fork to replace the lost funds. Bitcoin and Bitcoin cash is another hard fork brought about by Bitcoin's scalability issues.

29. Which is NOT a major type of cryptography?
(a) Secret Key Cryptography
(b) Public Key Cryptography
(c) Hashing and hash functions
(d) Elliptic curve cryptography

Ans: (d)
Explanation: There are three major types of cryptography, secret key cryptography whereby a sender used a common secret key to encrypt and decrypt a message. Public key cryptography is an improvement of this since here a sender and recipient each generate a key pair(public and private) to encode and decode messages, now there is no need to share the same key since it can be stolen. In addition to this, decoding a message encrypted using secret key cryptography is not difficult. Hashing applies mathematical one-way hash functions that map a message to its fixed-length hash. The latter two are used in blockchains.

30. What is the number of round computation steps in the SHA-256 algorithm?
(a) 88
(b) 64
(c) 128
(d) 256

Ans: (b)
Explanation: There are 64 round computation steps in the SHA-256 algorithm. The SHA-256 algorithm is one of the most popular hashing algorithms. It is used a lot in blockchains such as Ethereum and Bitcoin.

31. What is the approximate number of ETH mined every year?
(a) 20 million.
(b) 11 million.
(c) 16 million
(d) 18 million

Ans: (d)
Explanation: Ether capped its limit to 18 million ETH mined yearly. Mining of Ethereum will soon halt and we will have validators instead of miners. Validators stake their native coins to get the chance to mine and get a block reward.

32. BIPs are to Bitcoin what ___ are to Ethereum?
(a) EIPS.
(b) BIPS.
(c) None of the above.
(d) KIPS.

Ans: (a)
Explanation: EIPS are improvement proposals for the Ethereum protocol. EIPs describe standards for Ethereum. Since Ethereum is an open source community project, members can propose changes to the protocol causing soft forks here and then or just simple software updates. EIPS are a way for members to propose changes to the protocol. In the Bitcoin protocol, these are referred to as BIPS.

33. Which is NOT an Ethereum testnet?
(a) Kovan.
(b) Ropsten.
(c) Rinkeby.
(d) Safaricom.

Ans: (d)
Explanation: A test network is a mock of the main network. In this case, Rinkeby, Kovan, Ropsten, and Goerli mock the real Ethereum network protocol. Testnets are used to test decentralized applications during development. Remember that changing the state of a blockchain costs fees and during development, while testing stuff we use fake cryptocurrency to pay for the transactions. We can use live testnets that mock the behavior of the live mainnet or use a local ganache instance.

34. What language is used to write Ethereum smart contracts?
(a) Python.
(b) Rust.
(c) Solidity
(d) Vyper.

Ans: (c, d)
Explanation: Solidity and vyper are the main high-level programming languages used to write smart contracts that execute logic on the Ethereum protocol. Rust, Go, C++, and C# are mainly used to write the core blockchain software where dapps will run. For example, the original Bitcoin core was written in C++. Ethereum has clients in Go, Python, C++, and Java.

35. Which is NOT an Ethereum client?
(a) Geth(Go)
(b) OpenEth(Rust)
(c) Nethermind(C#, .NET)
(d) Bitcoind(C++)

Ans: (d)
Explanation: Other Ethereum clients include, Besu written in Java, and Erigon written in the go programming language. Ethereum clients are what decentralized applications run on. Every miner or network participant must download and install the client to process, mine, and validate transactions on Ethereum.

36. Which is NOT a type of an Ethereum client?
(a) Full client.
(b) Light client.
(c) SPV client.
(d) Remote client.

Ans: (c)
Explanation: Full client/nodes store the entire copy of the blockchain. Light clients store a copy of the entire blockchain, they gate their information from full clients. A remote client does not validate or store any blockchain data. Remote clients are mainly used to implement crypto wallets.

37. Which is NOT an Ethereum wallet type?
(a) Public wallet.
(b) Software wallet.
(c) Paper wallet.
(d) Hardware wallet.

Ans: (a)
Explanation: We can store Eth in software wallets(desktop, mobile, web), paper wallets, or hardware wallets(usb). The latter is the safest although inconvenient to daily crypto users. Software wallets are the most commonly used wallets. Paper wallets can succumb to wear and tear.

38. What is the name of the Virtual Machine that compiled Solidity/Vyper code into bytecode for execution on the blockchain?
(a) JVM
(b) EVM
(c) GCC
(d) G++

Ans: (b)
Explanation: The Ethereum Virtual Machine compiles smart contracts written in Solidity of Vyper into byte code that can be executed on the blockchains. JVM is a Java virtual machine for JIT compilation. GCC and G++ are C and sC++ compiler respectively.

39. Where do decentralized apps store their data?
(a) Google servers.
(b) Microsoft servers.
(c) Amazon servers.
(d) A decentralized network of nodes.

Ans: (d)
Explanation: Fully decentralized apps store their data on the blockchain which is a network of nodes. Decentralized applications can store data off-chain or on-chain depending on their application architecture. Off-chain storage leverages other storage mediums not located in the blockchain, these could be simple servers owned by a third party. On-chain storage is storing everything on the blockchain, on the decentralized network of nodes.

40. In 2021, what was the all-time high price for Ether?
(a) 3500
(b) 2200
(c) 4800
(d) 4000

Ans: (c)
Explanation: In May 2021, Ether was valued at $4800 per Ether.

41. What was the highest amount paid for an Ethereum transaction?
(a) $300000
(b) $200000
(c) $100000
(d) $400000

Ans: (a)
Explanation: $300000 is the highest amount in USD pad for a transaction on the Ethereum network.

42. What is Metamask?
(a) A browser extension to generate private keys.
(b) A browser extension to sign transactions with a private key.
(c) A browser extension to operate on the Bitcoin blockchain.
(d) None of the above.

Ans: (b)
Explanation: Metamask is a browser extension that is used to sign transactions with a private key no matter the blockchain network. It connects to any blockchain via RPC. With metamask we can import crypto wallets using private keys, sign transactions, send and receive cryptocurrency and operate on any blockchain.

43. What is the highest denomination of Ethereum's native cryptocurrency?
(a) Ether
(b) Gwei
(c) Tether
(d) Wei

Ans: (a)
Explanation: Ether is the highest Ethereum denomination.

44. Select the correct order for Ethereum denominations?
(a) Gwei, Wei, Szabo, Finney, Ether
(b) Wei, Gwei, Finney, Szabo, Ether
(c) Wei, Finney, Szabo, Ether, Tether
(d) None of the above

Ans: (d)
Explanation: Ethereum's order of denominations is, Wei, Kwei(babbage), Mwei(lovelace), Gwei(shannon), Szabo(microether), Finney(milliether), and Ether.

45. What is a nonce?
(a) The sum of all ethers in a contract address.
(b) A number of transactions in a block.
(c) A number to prevent against replay attacks.
(d) A checksum of the hash of the previous block.

Ans: (c)
Explanation: A nonce is a number only used once to prevent against replay attacks. If the number is used once, then we expect every transaction to have a different nonce. This number is increased every time we send a transaction from an account.

46. Select the correct statement?
(a) An address is 20 bytes long, a public key 64 bytes, and the private key 32 bytes
(b) An address is 20 characters long, a public key 32 characters long, and a private key 64 characters long
(c) There is no public key, the public key is the address, both are 20 bytes, the private key 32 bytes long
(d) None of the above.

Ans: (a)
Explanation: An Ethereum address is 20 bytes long. The public key is 64 bytes long, to get the public address, we hash(keccack-256) it and take the last 20 bytes. The private key is 32 bytes long.

47. What is the approximate number of transactions that can be placed in a single Ethereum block?
(a) 1250
(b) 25
(c) 380
(d) 420

Ans: (c)
Explanation: The largest block size in Ethereum is around 8 million gas and an ETH transaction consumes 21000 gas meaning that we can have approximately 380 transactions in a single block.

48. What hashing algorithm is used in Ethereum?
(a) MD5
(b) SHA-1
(c) Keccack-256
(d) None of the above.

Ans: (c)
Explanation: Ethereum uses the Keccack-256 hashing algorithm for its hashing needs. Hashing and cryptography are security primitives used by Ethereum. Hashing is used to hash transactions on the blockchains. Inside a block in a blockchain. Transactions are organized in a tree-like structure referred to as a merkle tree and since hashing produces a fixed-length string the merkle root, is a combination of all transactions in a block. In such a case if a single character or digit changes so does the hash and if the hash changes the block is invalid and is kicked out of the blockchain.

49. What data structure is used to store transactions in a block?
(a) Trees
(b) Lists
(c) Linked lists
(d) Graphs

Ans: (a)
Explanation: A Merkle tree is a tree data structure that is used to store transactions in an Ethereum block. A merkle root hash in a tree is a combination of transaction hashes on the left and right subtrees of the merkle tree.

50. Which of the statements is FALSE regarding contract accounts?
(a) Have a balance.
(b) Controlled and owned by blockchain participants.
(c) Have a contract associated with them.
(d) Have a persistent state.

Ans: (b)
Explanation: Contract accounts are NOT controlled by participants rather are associated with smart contracts that live on the Ethereum blockchain.

51. Which is the statement is FALSE regarding EOA Ethereum accounts??
(a) Have an ETH balance.
(b) Are owned and controlled by blockchain users.
(c) Have contract code associated with them.
(d) Can send or receive transactions.

Ans: (c)
Explanation: EOA accounts have no contract code associated with them. These are accounts that are owned by users. Users can send and receive Ether.

52. What does gas fees cater for?
(a) Computations in a single block.
(b) Storage space in a block.
(c) Computations on the network.
(d) All the above.

Ans: (d)
Explanation: Gas fees are costs associated with all transactions on the blockchain. Gas fees are proportional to the computational steps involved during the execution of a piece of logic. If the logic is complex, so are the gas fees.

53. What is the result of transacting with insufficient gas fees?
(a) Pending transactions.
(b) Slower transactions.
(c) Transaction failure.
(d) None of the above.

Ans: (a)
Explanation: If gas fees are insufficient the transaction will sit idle on the network and won't be processed. Transactions on the blockchain are not free. This is because it is a network that is being maintained just as any other network or server or data center. The difference is that there is a low barrier of entry to get started in a decentralized system.

54. Which of the statements is TRUE?
(a) Gas is a fee paid to miners for mining blocks.
(b) Gas is the cost of computational work on the blockchain.
(c) Gas is NOT mandatory when sending ETH transactions.
(d) Gas fees are based on the size of a transaction.

Ans: (b)
Explanation: Gas is the cost for computational work. We can compare gas to actual gas/petroleum used by cars. It is the minimum fee required for a transaction to execute successfully.

55. Why is hashing used in Ethereum?
(a) To compare data.
(b) To evaluate the validity of data
(c) To produce a transaction signature for all block transactions.
(d) All of the above.

Ans: (d)
Explanation: Hashing and public-key cryptography are what make blockchains such as Ethereum secure. Hashing not only reduces the data size but also ensures the blockchain is tamper-proof.

56. What is a state machine.?
(a) All the below.
(b) Computers with memory.
(c) Computers with a global state.
(d) Computers that are never offline.

Ans: (a)
Explanation: Ethereum state machine is a machine with a large data structure that holds not only all accounts and balances, but a machine state, which can change from block to block according to a pre-defined set of rules, and which can execute arbitrary machine code.

57. What are Dapps?
(a) Apps that run on central servers.
(b) Apps that run on a blockchain.
(c) Apps that run on a decentralized blockchain.
(d) None of the above.

Ans: (c)
Explanation: Dapps are applications that run on a decentralized blockchain such as Ethereum. Unlike centralized applications which run on a backend owned and controlled by a single organization, decentralized applications eliminate intermediaries for example a decentralized finance application eliminates the need for banks by programming whatever a bank does and open sourcing the code for auditing then creating a useable frontend for users to manage their funds without needing banks or trust between each other. This way users can send and receive with very little to no transaction fees, lend their capital and earn interest without cutting in the bank, and borrow with sensible interest rates among other benefits.

58. Which is a use case of smart contracts?
(a) Supply chains.
(b) Gambling.
(c) Decentralized finance.
(d) All the above.

Ans: (d)
Explanation: Smart contracts have a wide variety of use cases. They can be used in decentralized finance(trading, borrowing, lending), and insurance. A smart contract is just code like any other. Since blockchains have paved the way for the 'web of transactions' code used to write applications that run on a blockchain can be thought of as a contract since it is just a sequence of instructions that execute when a condition is triggered.

59. What is the approximate size of an Ethereum block in MBs?
(a) 4
(b) 8
(c) 16
(d) 32

Ans: (a)
Explanation: An Ethereum block is around 80KBs which is about 4MBs. A block in a blockchain stores transactions. Block size is one of the factors that determine the speed of a blockchain network in that a smaller block size results in a slow network for example since the Bitcoin block size is small - 1MB, Bitcoin transactions are slow.

60. Which is a step involved in smart contract development?
(a) Reconfirm is your business needs a smart contract.
(b) Understand the limitations of a smart contract.
(c) Hiring a smart contract developer.
(d) All the above.

Ans: (d)
Explanation: We also need to plan out the development process and test the smart contract thoroughly before deploying it to the blockchain. Smart contracts have many applications however not everything can utilize the maximum benefits of a blockchain.

Ethereum Multiple Choice Questions [for Interviews]
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