Blockchain Transactions, Keys, Signatures, ZK-SNARKs

Blockchain Wallet

A digital tool that allows users to manage, store and interact with crypto assets.

What is a public key?

Cryptographic code derived from the private key used to generate a wallet address and receive finds. Meant to be shared publicly.

What is a private key?

A secret cryptographic code that signs transactions and proves ownership of funds. Must be kept secret.

What is a cold wallet?

Offline wallet.

Pros of cold wallet

very secure

Cons of cold wallet

less convenient

What is a hot wallet?

wallet connected to the internet

Pros of hot wallet?

Convenience

Cons of hot wallet?

prone to hacks

What is a custodial wallet?

A service provider controls keys. (Coinbase etc)

Pros of custodial wallet?

convenience

Cons of custodial wallet?

lack of control & trust dependency

What is a non-custodial wallet?

A wallet where the user controls their private keys.

Pros of non-custodial wallet

Full ownership

Cons of non-custodial wallet

more responsibility

What are the main steps of blockchain transactions?

Sender creates transactions > Broadcast to network > Miners validate > Added to blockchain > Receiver obtains funds

What is a block explorer?

A tool showing transaction details, block information, balances and mining data on a blockchain. eg Solscan

What is double spending?

When the same cryptocurrency is spent more than once. Prevented by consensus, confirmation, and economic penalties

How can double spending happen?

Broadcasting two transactions at once

Attempting to reverse a transaction

How does blockchain prevent double spending?

Network-wide validation
Mining & confirmations
High cost of reversing a block
Economic penalties in PoS systems

What is a nonce in mining?

A number used once, adjusted by miners to find a valid hash for a block

What does a nonce do in a transaction (ETH)?

Ensures each transaction from a wallet is unique; prevents replay attacks > duplicate transactions are rejected

What is asymmetric cryptography?

A system using a public key + private key for encryption, signing and verification.

How are digital signatures created?

Private key encrypts the message hash > Receiver uses public key to verify the hash matches.

What does a digital signature prove?

The sender is authentic
The message wasn’t tampered with 

How does encryption differ depending on the key used?

Private > public decrypts > verifies sender
Public > private decrypts > keeps message confidential to receiver

What does ZK-SNARK stand for?

Zero-Knowledge Succinct Non-Interactive Argument of Knowledge

What is zero knowledge proof?

A method to prove knowledge of something without revealing the information itself.

What is a key feature of SNARKs?

Very small. fast verifiable proofs
No interaction needed between prover and verifier

Application of ZK-SNAKRs

Privacy transactions

Scalability
Confidential blockchain voting system

What is symmetric encryption?

One key use for both encryption and decryption; fast; key sharing beforehand. Used in private blockchians. 

Examples of symmetric encryption?

AES, Triple DES, Blowfish

What is asymmetric encryption?

Uses a public key for encryption and private key for decryption; used in public blockchain verification. 

Common asymmetric algorithms

RSA, Elliptic Curve Cryptography

Why is ECC preferred over RSA?

Provides the same security with much smaller key sizes > more efficient.