If you're looking for Bitcoin Interview Questions & Answers for Experienced or Freshers, you are at the right place. There are a lot of opportunities from many reputed companies in the world. According to research Bitcoin has a market share of about 37%.
So, You still have the opportunity to move ahead in your career in Bitcoin Analytics. Mindmajix offers Advanced Bitcoin Interview Questions 2020 that helps you in cracking your interview & acquire your dream career as Bitcoin Analyst.
Bitcoin Interview Questions And Answers
- What do you mean by Bitcoin Mining?
- What is the difference between Blockchain and Banking Ledgers?
- How is Bitcoin Purchased?
- What do you mean by Double Spending?
- Who developed Bitcoin?
- Should we perceive it as important?
- What do we mean by hard limit?
- Can we sell Bitcoins?
Q1: What do you mean by Bitcoin Mining?
Ans: Bitcoin mining is equivalent to gold mining in digital form. The procedure requires specialized computers equipped for solving algorithmic equations. These computers help miners to authenticate blocks of transactions held within each network.
Miners are rewarded in Bitcoin who confirms and authenticates transactions on the blockchain. These miners can harvest new coins which will continue till the last Bitcoin is found.
Q2: What is the difference between Blockchain and Banking Ledgers?
Ans: Financial institutions involved in dealing with daily transactions use ledgers to record and timestamp them. It is fully under the control of the central govt. authorities and strictly regulated.
Blockchain is very similar to ledgers with a striking difference. It is open to all and each and every single individual can operate with their own set of perceptions and practice accordingly.
Blockchain can be customized as per the will of the programmers and doesn’t need any regulations. Bitcoin isn’t being regulated by govt. authorities because it covers an end number of Central Bank Jurisdictions.
Q3: How is Bitcoin Purchased?
Ans: Bitcoins are brought from many sources. It can be purchased online using brokerage services, with the help of credit cards or other e-wallets like PayPal, etc.
They can be also purchased with the help of LocalBitcoins and from Bitcoin Teller Machines equivalent to Cash vending ATMs. Bitcoin.com offers a recommended list of authenticated online exchange centers that sell Bitcoins.
Q4: What do you mean by Double Spending?
Ans: Sometimes people try to make use of the same Bitcoins twice. This is known as double-spending. There are only 21 million set cap on the protocol and can’t be produced anymore.
Each and every single Bitcoin is unique which legitimizes its transactions. Anyone trying to duplicate a transaction is notified that it is unacceptable.
Q5: Who developed Bitcoin?
Ans: The original form of Bitcoin was developed by Satoshi Nakamato an anonymous person or group of developers under open source credentials in 2008. He outlined the process of cryptocurrency. It was the first successful digital currency designed with faith equivalent to central banks.
Satoshi handed over Bitcoin to developers in 2010. Ever since then, hundreds of independent developers have customized the core codes and modified throughout these years.
[Related blog: Bitcoin Tutorial for Beginners]
Q6: Should we perceive it as important?
Ans: Bitcoin was launched as a “peer to peer electronic cash system” in its roadmap published in 2009. To date, it is the most accurate description of Bitcoin.
Bitcoin is a network based on consensus and is completely digital money. The beauty of this transaction system is there is no requirement for centralized servers or third party clearing centers to settle transactions.
Credit cards may take months to settle payments but on Bitcoin, they can be settled within 10 minutes. All these transactions are secured and recorded in Blockchain.
Q7: What do we mean by hard limit?
Ans: A hard limit is the limit of the total no of Bitcoins in circulation. It cannot be printed more and stocked, unlike cash which can be printed as per our wish. Bitcoin is a deflationary currency and will grow in value based on its exchange value only, unlike cash which grows with liquid mode also.
The Bitcoin universe is changing at a pace and staying ahead with changes almost on an hourly basis.
Q8: Can we sell Bitcoins?
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Ans: Bitcoins can be sold in many ways. From selling them online to an exchange or someone who lives nearby. The way it is purchased, similarly, it can be sold too. Bitcoins vary their prices regularly as per the demand.
It can also be sold through two way ATMs, which allow the selling and purchasing of Bitcoins. Transaction fees are the lowest amongst all bank charges applied globally.
Q9: Can stores accept Bitcoins?
Ans: Anyone can accept Bitcoin. There are many B2B services and hardware installation for the convenience of the storeowners.
All these organizations offer to invoice and account with their services. Third-party services are not all compulsory and individuals can transact and invoice on their own.
Q10: Why should we trust Bitcoin?
Ans: Bitcoin’s trust is based on the fundamental valuations of human faith in mathematical algorithms, encryption, and numbers.
It is a network operated system based on the principles of technical freedom, decentralization, and open sources code with true peer to peer technology.
Q11: Is Bitcoin anonymous?
Ans: No, wherever there are financial transactions, fraudsters will survive and that’s why it cannot be anonymous. Participants are identified by public address with long strings of 30 characters starting with numeral 1 or 3.
Each and every transaction can be identified by the one who initiates it. Since it doesn’t provide a name associated with the string it can be termed as pseudonymous but can be traced in case of any illegitimate actions.
Q12: What can Bitcoin do?
Ans: Bitcoin has the capability to change the monetary landscape of the world. Apart from digital currency, it can be used for crowdfunding, voting mechanism, initiate trusts, wills and contracts, decentralized domain names, future markets, and all other fundamental functioning of an ethical financial system.
Digital currency is just the beginning of the evolution of a single global financial system.
Q13: What will happen if I lose Bitcoin?
Ans: Each and every single wallet is associated with individual keys. If anyone loses the key, there is no way to recover Bitcoins as it doesn’t give the opportunity to retrieve with the help of any passcode.
Upgraded versions like Mycelium do give the opportunity to create a new private key to restore the new wallet.
Q14: Who governs Bitcoin?
Ans: Bitcoin is not a company owned by someone. It is not governed by a body. The software is a protocol and works on its own and upgraded by developers. They are supported by groups like miners who own the machines that generate new Bitcoins and maintain the security of the network.
They do have the power to vote with their hardware to select which Bitcoin software to be supported. Developers may create and release essential changes to the existing protocol but will not be affected unless the miners prefer to accept them.
Q15: What is a Bitcoin wallet?
Ans: Bitcoin is a digital wallet that preserves, sends, and accepts Bitcoins. It’s equivalent to a leather wallet full of cash in our trouser’s hind pocket. The most widespread form of the digital wallet is on Smartphones which access the camera and uses it as a scanner to convert QR codes into data.
Some apps have value-added features like location-based Bitcoin business guides, links to authorized exchange centers., more secured vaults for holding digital tokens instead of Bitcoins.
Q16: Why are Bitcoin prices so fluctuating?
Ans: Until and unless Bitcoin becomes the global currency, it will be popular among traders and other price speculators. The demand is always more than the supply in the case of Bitcoins. Prices of Bitcoin are subject to market forces and any news may make it volatile.
Large economies like the EU, USA, and China may announce regulations either favoring or restricting Bitcoin. In 2013, the prices fell down as China banned the use of Bitcoin.
Q17: Can I Trade Bitcoin without selling at an exchange?
Ans: More and more people prefer to trade Bitcoin directly without an exchange. The reason behind it is security and trust. Many exchanges were hacked and their Bitcoins vanished without explanation.
Exchanges these days have to be backed by KYC requirements to banks, and if not maintained properly money laundering charges may chase you.
Q18: Can I mine Bitcoins?
Ans: Bitcoins mining was easy with the help of desktop computers in its early days. But today it has its own machines and the power consumption has gone extremely high. For the installation of one such machine, you have to check for a cost-effective environment which is not easy these days.
Bitcoins mining ASIC machines are constantly being upgraded and the moment it becomes obsolete, it will be very difficult to mine any more Bitcoin.
Q19: What can I buy with Bitcoins?
Ans: We can buy anything that is legally sold in the world. It’s very easy to use in any shopping mall to vendors who accept the digital mode of payments and Bitcoins.
Amazon pays a 20% discount on any purchase through Bitcoins. Bitcoin has its own store which sells Bitcoin-related products like T-shirts, etc.
Q20: What is a Bitcoin address?
Ans: It is a long 27-34 string of alphanumeric that acts similarly to an email address or username in any social network. These are utilized to timestamp and record each and every transaction in the Blockchain.
It can denote one single individual, a group of persons, or any organization depending on their team spirit and level of security maintained. It is advisable to use a new address every time of transaction.
Q21: How do Bitcoin Transactions work?
Ans: Each and every single transaction is composed of an amount which is the input as sending address, and output data of receiver’s address, and the private keys that actually allow debiting of Bitcoins from an individual’s account.
Blockchain is basically a database that maintains the transaction history since its inception.
Q22: What is the public key?
Ans: Every Bitcoin address constitutes a public and a private key. The public key comes in the scenario when someone is sending money whereas the private key allows us to spend our own Bitcoins.
It’s the authentication process of Bitcoin transactions. These are secured way of dealings and have been designed through extensive research on mathematics through asymmetric cryptography.
Q23: How to accept Bitcoin payments in our store?
Ans: The feature to add Bitcoin in individual payments services takes less than 10 minutes to be installed. Merchant service providers like Bitpay also provides the services at physical locations.
Chargeback facilities cannot be accessed in Bitcoin and the refund policy is fully governed by the store owner. Bitcoins helps in broadening your reach to the global user who prefers using cryptocurrency.
Q24: What are the costs involved?
Ans: Fees involved in transactions are known as miner fees. They are the ones who authenticate the transactions within the network.
Each transaction has its own time limit of being authenticated. Large volumes are generally quickly authenticated rather than smaller transactions.
Q25: What do we mean by an Unconfirmed Transaction?
Ans: Funds that haven’ to been authenticated by miner are known as unconfirmed transaction and goes back into the sender’s wallet.
Generally, it doesn’t happen. It takes 10 minutes for authentication only. In some cases where there is extreme traffic, it has been reported to lasting even for 1 hr.
Q26: Is Bitcoin Legal?
Ans: Its legality depends on the jurisdiction. Countries like Equador, China have banned Bitcoin transactions. Regulations do vary from country to country and a proper search should be done before the initiation of transaction in any organization.
Wikipedia and many other online services are available to get proper information on this topic.
Q27: What is a Full Node?
Ans: Full nodes are a second layer of the Bitcoins security system. They are a group of people who work in an altruistic manner which means they work without being rewarded.
They help to keep the security system clean and keep the brand from earning any dubious distinction. It also minimizes the chances of double spending of the Bitcoins.
Q28: How does Bitcoin work?
Ans: Bitcoin is a mobile app and functions similarly to an e-wallet app. Generally, these e-wallets use the currencies issued by central banks.
But Bitcoins use their own currency in a digitalized form which has its own limits of production and is limited to 21 million Bitcoins only.
Q29: What are the advantages of Bitcoin?
Ans: Following benefits can be attributed to Bitcoins:
- Worldwide accepted at the same rates and no risk of depreciation or appreciation.
- Lowest transactional fees in this world.
- Fewer risks and irreversible transactions benefitting merchants.
- Fully Secured and control by an encrypted form.
- Transparent & neutral mode of administration as anyone can check data real-time.
Q30: What are the disadvantages of Bitcoin?
Ans: Following are the disadvantages: -
- The degree of Acceptance is very low as many people are still unaware of its benefits.
- The total no of Bitcoins in Circulation is very small as compared to what it should be. That’s why even a small even can make the price of the Bitcoin volatile.
- Bitcoins is still in its beta form and many incomplete features are in active development.