QUESTION ONE (30 MARKS)

a) A symmetric-key cryptosystem consists of three functions: a key generator GG, an encryption function
EE, and a decryption function DD. For any pair of users, say Alice (A) and Bob (B), GG takes as input a
string of random bits and produces as output a shared key KABK_{AB}. Either Alice or Bob can take a
plaintext message xx and produce a ciphertext message y=E(x,KAB)y = E(x, K_{AB}). The ciphertext yy
can be sent over an insecure channel, and the recipient can recover x=D(y,KAB)x = D(y, K_{AB}).

i) Explain three basic requirements for such a system to be secure.

ii) Discuss why symmetric-key cryptography isn't sufficient as a foundation for secure Internet
communication and, in particular, for secure web-based commerce.

Answer:
i. Basic requirements for security:

1. Key Confidentiality: The shared key KABK_{AB} must remain secret between Alice and Bob to
prevent unauthorized access.

2. Message Confidentiality: The ciphertext y=E(x,KAB)y = E(x, K_{AB}) should not reveal any
information about the plaintext xx without the key.

3. Message Integrity: The system must ensure that the decrypted ciphertext D(y,KAB)D(y, K_{AB})
matches the original plaintext xx, ensuring no tampering during transmission.

ii. Limitations of symmetric-key cryptography in secure web-based commerce:

1. Scalability Issues: Managing unique keys for every pair of communicating entities is impractical for
large-scale systems.

2. Key Distribution Problem: Securely sharing and managing keys over insecure channels is
challenging.

3. No Non-repudiation: Since both parties share the same key, it’s impossible to prove who sent a
particular message.

b) List and explain factors that gas usage depends on in transactions and how is the transaction fee
calculated?

Answer:
Factors affecting gas usage:

1. Complexity of Operations: Computational intensity of the smart contract's functions.

2. Storage Requirements: Writing data to the blockchain consumes more gas than reading it.

3. Network Congestion: High traffic can increase the gas price due to supply and demand dynamics.

Transaction fee calculation:

Transaction Fee=Gas Used×Gas Price\text{Transaction Fee} = \text{Gas Used} \times \text{Gas Price}

c) Identify two major benefits of using blockchain in healthcare management.

Answer:

1. Data Security: Ensures secure and tamper-proof storage of patient records.

2. Efficient Data Sharing: Facilitates real-time access to healthcare data among authorized
stakeholders.

d) A liquidity pool operated by an automated market maker contains 3000 Ether (ETH) and 9,000,000
Tether (USDT). You want to exchange 50,000 USDT into ETH. How many ETH can you take out of the
pool?

Answer:
Using the constant product formula x⋅y=kx \cdot y = k:

 Initial state: x=3000x = 3000 ETH, y=9,000,000y = 9,000,000 USDT, k=x⋅y=27,000,000,000k = x \

cdot y = 27,000,000,000.

 Final state: y′=9,000,000+50,000=9,050,000y' = 9,000,000 + 50,000 = 9,050,000.

 Solving for x′x':

x′=ky′=27,000,000,0009,050,000≈2983.61 ETH.x' = \frac{k}{y'} = \frac{27,000,000,000}{9,050,000} \approx

2983.61 \, \text{ETH}.

Amount of ETH removed:

3000−2983.61=16.39 ETH.3000 - 2983.61 = 16.39 \, \text{ETH}.

e) Identify two major properties of a blockchain network and state their properties.

Answer:

1. Decentralization: The system is distributed across nodes, eliminating the need for a central
authority.

2. Immutability: Data once written cannot be altered, ensuring the integrity of the blockchain.

f) Consider the following Solidity function contained in an Ethereum contract:

function wasted(uint246 x, uint256 y) {

while (uint256(sha3(x)) != y) {

x++;

Assume you know an xx and yy for which this function never terminates. Explain how a malicious miner
can use this function to waste other miners' resources without spending any of its own resources.

Answer:
A malicious miner can run the wasted function with values of xx and yy that never satisfy the condition
sha3(x)=ysha3(x) = y. This creates an infinite loop, consuming computational resources of competing
miners while the malicious miner focuses on executing valid transactions or solving the block, giving them
an unfair advantage.

QUESTION TWO (20 MARKS)

a) Cryptocurrencies like Bitcoin use wallets. Explain how a wallet works related to public and private
keys.

Answer:
A cryptocurrency wallet consists of a private key and a public key.

 The private key is used to sign transactions, proving ownership and authorization to spend the
associated cryptocurrency.

 The public key is derived from the private key and is used to generate wallet addresses that others
can use to send funds.

 Transactions are verified on the blockchain using the public key without exposing the private key.

b) Identify four areas where blockchain might have applications.

Answer:

1. Supply Chain Management

2. Healthcare

3. Voting Systems

4. Real Estate Transactions

c) Create a Merkle tree below for the following transactions: A, B, C, D, E, F, G. Show the entire tree from
the transaction level and all leaf/hash levels until you are at the root.

Answer:

1. Leaf Hashes: Hash(A), Hash(B), Hash(C), Hash(D), Hash(E), Hash(F), Hash(G)

2. Intermediate Nodes:

o Level 1: H1=Hash(Hash(A)+Hash(B)),H2=Hash(Hash(C)+Hash(D)),H3=Hash(Hash(E)
+Hash(F))H_1 = Hash(Hash(A) + Hash(B)), H_2 = Hash(Hash(C) + Hash(D)), H_3 =
Hash(Hash(E) + Hash(F))

o If odd number of transactions, duplicate the last hash: H4=Hash(Hash(G)+Hash(G))H_4 =

Hash(Hash(G) + Hash(G)).

3. Root Node: Combine intermediate nodes: Root=Hash(H1+H2+H3+H4)Root = Hash(H_1 + H_2 +

H_3 + H_4).
QUESTION THREE (20 MARKS)

3a) Your company is considering blockchain technology to support a collaborative energy production
organization.

i. Define which blockchain will you use to support this project?

 Permissioned Blockchain: Ensures only verified participants (e.g., energy producers and
consumers) can interact, offering better scalability and privacy.

ii. Choose a transaction validation strategy. Justify your choice.

 Proof of Authority (PoA): Ensures quick and energy-efficient transaction validation by trusted
nodes, suitable for private energy networks.

iii. Define stakeholders and value criteria using a diagram.

 Stakeholders: Energy producers, consumers, IoT device manufacturers, grid operators, regulators.

 Diagram: Illustrates interactions such as energy transactions, data flow from IoT devices, and
payments.

iv. Why is the difficulty of Bitcoin's proof of work set to ten minutes? What would go wrong if changed
to 12 seconds?

 Reason: A 10-minute interval balances the trade-off between fast confirmation and network
security.

 Problem with 12 seconds: Frequent block generation increases stale blocks and forks, reducing
network stability and security.

QUESTION FOUR (20 MARKS)

a) Blockchain Ecosystem: What are the essential elements?

Answer:

1. Nodes: Devices participating in the network.

2. Ledger: Records all transactions.

3. Consensus Algorithm: Ensures agreement on the ledger's state.

4. Cryptographic Security: Protects data integrity and confidentiality.

b) List the four fields that identify a block.

1. Block Header

2. Previous Block Hash

3. Transaction List

4. Merkle Root
c) Explain three attacks resulting from a 51% attack.

1. Double Spending: Rewriting the blockchain to reuse spent funds.

2. Denial of Service (DoS): Blocking specific transactions from being confirmed.

3. Chain Reorganization: Altering transaction history to undermine trust.

d) Explain why Paxos uses a majority vote among 2f+12f + 1 nodes to ensure consistency.

 A majority ensures at least one overlapping node between conflicting views, preserving agreement
and preventing inconsistencies.

e) Minimum percentage of redundant traffic for 1 KB chunks using 160-bit SHA-1.

 SHA-1 hash size = 160 bits = 20 bytes.

 Percentage: 201000×100=2%\frac{20}{1000} \times 100 = 2\%.

QUESTION FIVE (30 MARKS)

a) What constitutes a blockchain network, including its main property?

Answer:
A blockchain network comprises nodes, a ledger, consensus protocols, and cryptographic mechanisms.

 Main Property: Decentralization ensures no single entity controls the network.

b) Differences between public and private blockchains.

Feature Public Blockchain Private Blockchain

Accessibility Open to all Restricted to specific users

Examples Bitcoin, Ethereum Hyperledger, Quorum

Speed Slower Faster due to fewer nodes

c) Two benefits of blockchain in supply chain management.

1. Transparency: Real-time tracking of goods.

2. Fraud Prevention: Immutable record of transactions.

d) What is a hashing algorithm? How does it work?

Answer:
A hashing algorithm converts input data into a fixed-size hash value. It is a one-way function, ensuring data
integrity.
Modulo Hashing Example:

h(x)=xmod 9h(x) = x mod 9

Stored values: 5,11,25,40,23.

Hash Table Contents (index 0 to 5):

 h(5)=5, h(11)=2, h(25)=7, h(40)=4, h(23)=5h(5) = 5,.

e) Two major properties of a blockchain network and their explanation.

1. Immutability: Data cannot be altered once written.

2. Transparency: Transactions are visible to all authorized participants.

QUESTION SIX (20 MARKS)

a) Identify four areas where blockchain might have applications.

Answer:

1. Finance: Secure transactions and decentralized finance (DeFi).

2. Healthcare: Safe storage of medical records.

3. Voting: Secure and transparent electoral processes.

4. Intellectual Property: Rights management and copyright tracking.

b) Define a Merkle hash tree and describe its role in blockchain.

Answer:

 Definition: A Merkle tree is a binary tree where each leaf node represents a transaction hash, and
non-leaf nodes represent the combined hash of their child nodes.

 Role in Blockchain:

o Ensures data integrity and efficient verification of transactions.

o Reduces the amount of data needed for validation by storing only the root hash.

c) Explain the meaning of a Merkle root in the block header.

Answer:
The Merkle root is the topmost hash of a Merkle tree, summarizing all transactions in a block. It ensures
data integrity; any change in the transaction data will alter the Merkle root, making tampering detectable.

QUESTION SEVEN (20 MARKS)

a) Describe the process of proof of work in Bitcoin mining.

Answer:
Proof of Work (PoW) is a consensus mechanism where miners solve complex mathematical problems
(finding a nonce) to validate transactions and create new blocks.

1. Miners compute hashes until one meets the difficulty target.

2. The first miner to solve the puzzle broadcasts the block.

3. Other nodes verify the solution and add the block to their chain.

b) Explain smart contracts and their use in blockchain.

Answer:
Smart contracts are self-executing programs stored on the blockchain. They execute predefined actions
automatically when certain conditions are met.
Uses:

1. Automated payments in finance.

2. Supply chain process tracking.

3. Decentralized applications (dApps).

c) Provide three reasons why blockchain is an improvement to the current system of data security and
transfer.

Answer:

1. Immutability: Prevents data tampering.

2. Decentralization: Eliminates single points of failure.

3. Transparency: Ensures all transactions are verifiable by authorized participants.

d) Describe business use cases related to blockchain traceability and transparency.

Answer:

1. Supply Chain: Real-time tracking of goods and authenticity verification.

2. Healthcare: Tracking drug production to prevent counterfeit medications.

3. Food Industry: Verifying origin and processing of food products.

QUESTION EIGHT (20 MARKS)

a) Explain the following consensus algorithms:

i. Delegated Proof-of-Stake (DPoS)

 Stakeholders vote to elect a small group of trusted nodes to validate transactions, making the
process faster and more energy-efficient.
ii. Proof-of-Stake (PoS)

 Validators are chosen based on the number of coins they hold (stake). It is energy-efficient
compared to PoW.

iii. MD5 Algorithm

 MD5 is a cryptographic hash function producing a 128-bit hash value. While fast, it is now
considered insecure due to vulnerabilities in collision resistance.

b) Describe what a digital ledger is and if blockchain is an incorruptible ledger.

Answer:

 A digital ledger is an electronic record-keeping system for tracking transactions.

 Blockchain as an incorruptible ledger: While blockchain is resistant to tampering due to

decentralization and cryptographic integrity, it can still be vulnerable to attacks like 51% or
exploits in poorly designed smart contracts.

c) Analyze the following Python blockchain code:

class Blockchain:

def __init__(self):

self.chain = []

self.generate_genesis_block()

def generate_genesis_block(self):

self.chain.append(GeekCoinBlock("@", ['Genesis Block']))

def create_block_from_transaction(self, transaction_list):

previous_block_hash = self.last_block.block_hash

self.chain.append(GeekCoinBlock(previous_block_hash, transaction_list))

def display_chain(self):

for i in range(len(self.chain)):

print(f"Data {i+1}: {self.chain[i].block_data}")

print(f"Hash {i+1}: {self.chain[i].block_hash}\n")

@property
 def last_block(self):

return self.chain[-1]

i. self.chain

 Represents the list storing all blocks in the blockchain.

ii. generate_genesis_block

 Creates the first block in the blockchain with a placeholder value for previous hash and predefined
data.

iii. create_block_from_transaction

 Generates a new block using the previous block's hash and a list of transactions.

iv. display_chain

 Prints all blocks, showing their data and hash values.

d) List any three costs involved with implementing a blockchain solution within an organization.

Answer:

1. Infrastructure Costs: Hardware and server requirements for running nodes.

2. Development Costs: Building and testing smart contracts and blockchain applications.

3. Maintenance Costs: Continuous updates, monitoring, and scaling.

QUESTION NINE (30 MARKS)

a) What does the gas usage in a transaction depend on and how is the transaction fee calculated? (3
Marks)
Answer:

 Gas Usage Depends On:

1. Complexity of the Operations: Simple operations like transfers require less gas, while
complex operations like loops or storing data require more.

2. Storage Costs: Writing or updating storage on the blockchain consumes more gas than
reading data.

3. Network Congestion: Higher demand increases gas prices.

 Transaction Fee Calculation:

Transaction Fee=Gas Used×Gas Price\text{Transaction Fee} = \text{Gas Used} \times \text{Gas Price}

b) Explain what constitutes a blockchain network, including a main property of that network. (5 Marks)
Answer:
A blockchain network consists of nodes (participants), a shared ledger, consensus algorithms, and smart
contracts for automation.

Main Property:

 Decentralization: Data is distributed across all nodes, reducing the risk of single-point failures and
ensuring trust without intermediaries.

c) If I provide you with a SHA256-hash of my name, would it be in principle possible for you to verify
whether the hash is indeed the output of my name? (4 Marks)
Answer:
Yes, it is possible to verify the hash by applying the SHA256 algorithm to your name and comparing the
resulting hash to the one provided. However, without access to your name, verification is not feasible.

d) Identify two major benefits of using blockchain in supply chain management. (5 Marks)
Answer:

1. Traceability: Real-time tracking of goods and transparent recording of their journey across the
supply chain.

2. Fraud Prevention: Immutable records ensure authenticity and prevent tampering.

e) A liquidity pool operated by an automated market maker contains 3000 Ether (ETH) and 9,000,000
Tether (USDT). You want to exchange 50,000 USDT into ETH. How many ETH can you take out of the
pool? (3 Marks)
Answer:
Using the constant product formula:

x⋅y=kx \cdot y = k

where xx and yy are the reserves for ETH and USDT respectively, and kk is constant.

Initial state:

x=3000, y=9000000, k=x⋅y=3000⋅9000000x = 3000, \, y = 9000000, \, k = x \cdot y = 3000 \cdot 9000000

After exchange, ynew=y+50000=9050000y_{\text{new}} = y + 50000 = 9050000.

To find xnewx_{\text{new}}, solve xnew⋅ynew=kx_{\text{new}} \cdot y_{\text{new}} = k:

xnew=kynewx_{\text{new}} = \frac{k}{y_{\text{new}}}

ETH received = x−xnewx - x_{\text{new}}.

f) Identify two major properties of a blockchain network and state their significance. (4 Marks)
Answer:

1. Immutability: Data recorded on the blockchain cannot be altered, ensuring trust and integrity.

2. Transparency: Transactions are visible to authorized participants, enhancing accountability.

g) Explain the Solidity code snippet below line by line. (6 Marks)

// SPDX-License-Identifier: MIT

pragma solidity >=0.4.0 <0.7.0;

contract SimpleStorage {

uint storedData;

function set(uint x) public {

storedData = x;

function get() public view returns (uint) {

return storedData;

Answer:

1. pragma solidity >=0.4.0 <0.7.0;

Specifies the Solidity version range required to compile the contract.

2. contract SimpleStorage
Defines the contract SimpleStorage.

3. uint storedData;
Declares an unsigned integer variable storedData to store data.

4. function set(uint x) public { storedData = x; }

A public function to set the value of storedData.

5. function get() public view returns (uint) { return storedData; }

A public view function that returns the value of storedData without modifying it.

QUESTION TEN (20 MARKS)

a) Identify some relatively any four areas where blockchain might have applications. (8 Marks)
Answer:

1. Healthcare: Secure storage and sharing of medical records and patient data.

2. Finance: Transparent and tamper-proof transaction records for banking and lending.

3. Supply Chain Management: Enhancing traceability of goods and inventory management.

 4. Voting Systems: Secure and transparent digital voting platforms.

b) Define a Merkle hash tree and describe its role in blockchain. (3 Marks)
Answer:
A Merkle tree is a data structure that uses hashes to summarize and verify the integrity of large data sets
efficiently.

Role in Blockchain:
It organizes transactions into a tree structure, where the root hash (Merkle root) represents all
transactions in the block. This ensures data integrity and quick verification.

i. Explain the meaning of a Merkle root in the block header. (3 Marks)

Answer:
The Merkle root is a single hash derived from all transactions in a block. It serves as a compact
representation, enabling verification of data consistency without accessing all transactions.

ii. Study the output of the Merkle tree graph below and interpret how the data structure works. (6
Marks)
Answer:

 Transactions are hashed at the leaf nodes.

 Pairs of hashes are combined and hashed recursively to form parent nodes.

 This process continues until a single hash, the Merkle root, is obtained at the top.

 Any modification in a transaction alters the corresponding hash, invalidating the Merkle root.

QUESTION ELEVEN (20 MARKS)

3a) The company you work for is considering introducing blockchain technology to support a
collaborative energy production organization.
i. Which blockchain will you use to support this project? (4 Marks)
Answer:

 Blockchain Choice: Ethereum

 Reason: Ethereum supports smart contracts, enabling automation of energy exchanges and
payments without intermediaries.

ii. Choose a transaction validation strategy and justify your choice. (4 Marks)
Answer:

 Strategy: Proof of Stake (PoS)

 Justification: PoS consumes less energy and provides scalability, which is crucial for IoT devices
and frequent energy transactions.
iii. Identify the blockchain organization and potential new partners using the Deloitte stack. For each
partner, identify the value they provide. (4 Marks)
Answer:

1. Energy Producers: Provide surplus energy for the grid.

2. Consumers: Utilize energy and provide feedback on demand.

3. IoT Device Manufacturers: Supply smart devices for monitoring energy production/consumption.

4. Blockchain Developers: Build and maintain the decentralized system.

c) Why is the difficulty of the proof of work in Bitcoin set to 10 minutes? What would go wrong if it was
changed to 12 seconds? (4 Marks)
Answer:

 10 Minutes: Ensures network stability by providing sufficient time for nodes to propagate new
blocks and reach consensus.

 At 12 Seconds: Higher risks of orphaned blocks (conflicting versions of the blockchain) and
reduced network security due to rapid block creation.

QUESTION TWELVE (20 MARKS)

a) Blockchain Ecosystem: What Are the Essential Elements? Explain. (4 Marks)

Answer:

1. Nodes: Devices or participants that maintain the blockchain network.

2. Consensus Mechanism: Protocols like Proof of Work or Proof of Stake to achieve agreement
among nodes.

3. Cryptography: Ensures secure and tamper-proof data transactions.

4. Smart Contracts: Automated programs that execute specific actions when conditions are met.

b) List the four fields on how you can identify a block. (4 Marks)
Answer:

1. Block Header: Contains metadata, including the previous block hash and timestamp.

2. Transaction Data: The list of transactions included in the block.

3. Hash: Unique identifier for the block.

4. Nonce: The number used in mining to meet the difficulty requirement.

c) Explain any three main attacks that can happen directly as a result of the 51% attack in Blockchain
Technology. (3 Marks)
Answer:

1. Double Spending: Reversing transactions to spend the same cryptocurrency twice.

2. Denial of Service (DoS): Preventing other miners from validating transactions.

3. Chain Reorganization: Rewriting parts of the blockchain, invalidating previously confirmed

transactions.

d) Consensus algorithm like Byzantine Generals Problem. Why is it sufficient in Paxos to use a majority
vote among 2f + 1 nodes to ensure consistency? (5 Marks)
Answer:
In a system with f faulty nodes, 2f + 1 ensures that even if f nodes act maliciously, the remaining f + 1
honest nodes form a majority to reach consensus. This ensures both fault tolerance and consistency.

e) Ignoring packet headers, if the system uses 1KB chunks and uses the 160-bit SHA-1 hash to compute
chunk IDs, what is the minimum percentage of the size of the original data stream that this system could
send with completely redundant traffic? (4 Marks)
Answer:

 Calculation:

o 1KB = 1000 bytes = 8000 bits.

o Each chunk has a 160-bit hash overhead.

o Overhead percentage = (160 / 8000) × 100 = 2%.

 Answer: The system could send a minimum of 2% redundant traffic.

QUESTION THIRTEEN (30 MARKS)

a) Explain what constitutes a blockchain network, including a main property of that network. (4 Marks)
Answer:
A blockchain network consists of nodes that share, verify, and maintain a distributed ledger.

Main Property:
Immutability: Once data is written to a blockchain, it cannot be altered, ensuring trust and transparency.

b) List several differences between a public and a private blockchain. Provide examples. (6 Marks)
Answer:

1. Access:

o Public: Open to anyone (e.g., Bitcoin).

o Private: Restricted to authorized users (e.g., Hyperledger).

 2. Consensus:

o Public: Decentralized, using Proof of Work/Stake.

o Private: Centralized or semi-decentralized.

3. Transaction Speed:

o Public: Slower due to high participant numbers.

o Private: Faster, as fewer nodes are involved.

c) Identify two major benefits of using blockchain in supply chain management. (4 Marks)
Answer:

1. Traceability: Ensures real-time tracking of goods throughout the supply chain.

2. Transparency: Provides tamper-proof records, improving trust among stakeholders.

d) What is hashing algorithm? How does it work? (6 Marks)

Answer:
A hashing algorithm generates a fixed-size output (hash) from input data.

How It Works:

1. Input data is processed through the algorithm.

2. A unique hash is produced, representing the input.

3. Any change in the input results in a completely different hash.

i. Using modulo 9 as the hash function h(x) = x mod 9, show the contents of the hash table after the
following values are stored: 5, 11, 25, 40, 23.
Answer:

 5 mod 9 = 5

 11 mod 9 = 2

 25 mod 9 = 7

 40 mod 9 = 4

 23 mod 9 = 5

Hash Table:
Index 2: 11
Index 4: 40
Index 5: 5, 23
Index 7: 25

e) Identify two major properties of a blockchain network. And state their properties. (4 Marks)
Answer:
 1. Decentralization: No single point of control; nodes maintain the network collectively.

2. Transparency: All transactions are visible to authorized participants in the network.

14. What is the difference between a blockchain and a distributed ledger? (4 Marks)
Answer:

 Blockchain: A specific type of distributed ledger that organizes data into blocks linked in a chain. It
uses cryptography to secure the data and typically operates with a consensus mechanism like
Proof of Work or Proof of Stake.

 Distributed Ledger: A broader concept that refers to a decentralized database distributed across
multiple nodes. It may or may not use a blockchain structure.

15. What are the main components of a blockchain block? (4 Marks)

Answer:

1. Block Header: Contains metadata such as the previous block’s hash, timestamp, and nonce.

2. Transaction Data: A list of transactions included in the block.

3. Hash: A unique identifier for the block generated using cryptographic hashing.

16. What is the role of smart contracts in blockchain? (5 Marks)

Answer:
Smart contracts are self-executing programs stored on a blockchain that automatically enforce predefined
rules and conditions.

Roles:

1. Automate processes (e.g., payments or agreements).

2. Reduce reliance on intermediaries.

3. Increase efficiency and transparency in transactions.

17. What is the difference between Proof of Work (PoW) and Proof of Stake (PoS)? (6 Marks)
Answer:

Feature Proof of Work (PoW) Proof of Stake (PoS)

Miners solve computational

Mechanism Validators stake tokens to validate transactions.
puzzles.

Energy Usage High energy consumption. Energy-efficient.

More secure against certain Vulnerable if a large portion of tokens is staked by

Security
attacks. malicious actors.
Feature Proof of Work (PoW) Proof of Stake (PoS)

Speed Slower due to mining. Faster due to simpler validation.

Example Bitcoin. Ethereum 2.0.

18. What is a Decentralized Autonomous Organization (DAO)? (4 Marks)

Answer:
A DAO is an organization managed through smart contracts on a blockchain. It operates without
centralized leadership, relying on collective decision-making by its members, who vote using governance
tokens.

19. Explain the concept of "gas" in Ethereum. (4 Marks)

Answer:
Gas refers to the unit of measurement for computational work required to execute transactions or smart
contracts on the Ethereum blockchain.

Calculation:

 Gas Cost: Determined by the complexity of the operation.

 Gas Price: The price users are willing to pay per gas unit (in Gwei).

 Transaction Fee: Gas Cost × Gas Price.

20. What is the difference between a hard fork and a soft fork? (5 Marks)
Answer:

 Hard Fork: A radical protocol change that is not backward compatible, creating two separate
blockchains (e.g., Bitcoin vs. Bitcoin Cash).

 Soft Fork: A minor protocol change that is backward compatible, where non-upgraded nodes can
still process transactions under new rules.

21. What are the disadvantages of blockchain technology? (6 Marks)

Answer:

1. Scalability Issues: Limited transaction throughput compared to centralized systems.

2. High Energy Consumption: Especially for Proof of Work systems.

3. Complexity: Difficult for non-experts to understand and implement.

4. Regulatory Uncertainty: Laws around blockchain are still evolving.

5. Data Immutability Risks: Errors or malicious data cannot be deleted.

6. Storage Requirements: Growing blockchain size requires significant storage capacity.

22. How does a private key differ from a public key in blockchain? (4 Marks)
Answer:

 Private Key: A confidential key used to sign transactions and access blockchain assets.

 Public Key: A publicly shared key used to verify the signature or encrypt data.

23. What are the challenges in integrating blockchain with IoT? (6 Marks)
Answer:

1. Scalability: Handling large volumes of IoT transactions on the blockchain.

2. Latency: Delays in processing and confirming transactions.

3. Energy Consumption: IoT devices often have limited energy, incompatible with energy-intensive
blockchain processes.

4. Interoperability: Ensuring seamless communication between IoT devices and blockchain networks.

5. Data Security: Protecting sensitive IoT data stored on a public ledger.

6. Cost: High setup and operational costs.