Assessment 1

Question pool 4 - 6/8

1. How do nodes determine if transactions or blocks they are receiving are valid?

   1. By checking them against the protocol rules.

   2. There isn’t a need as the transactions and blocks are only able to be propagated if they are valid.

   3. Finding if they have a correct proof-of-work by checking it against their own proof-of-work.

   4. By attempting to build a new block upon them.

2. What are the main activities of a node?

   1. To watch other nodes and be vigilant in preventing the network from being taken over by hostile actors.

   2. To timestamp valid transactions and prevent invalid activity from being accepted.

   3. To validate all transactions taking place so its owner can be certain their own transactions will be accepted.

   4. To replicate the full blockchain and keep Bitcoin decentralized.

3. What must occur before a transaction or block is accepted and propagated to other nodes?

   1. Each event identified by a node must be evaluated against the network rules.

   2. Each event identified by a node must be approved by the node operator even if it follows the rules and policies.

   3. Nothing as nodes are programmed to automatically propagate transactions and blocks even if they are not valid.

   4. The node must ensure that the event was received from another node.

4. What are immutable rules?

   1. Rules that define the format and restrictions that transactions and blocks must follow.

   2. Rules that dictate there must be no changes in any way to the operation of the Bitcoin network.

   3. Rules that allow for Bitcoin to function.

   4. Rules that are decided by the majority of Bitcoin users.

5. How are agreements enforced?

   1. Through the application of proof of work.

   2. By nodes building blocks.

   3. By using Nakamoto consensus.

   4. All of the above

6. What is an “Honest Node”?

   1. An ‘honest node' is a node that validates its owner’s transactions but does not make blocks for the rest of the network.

   2. A node which finds and works on the longest chain of valid blocks.

   3. A node that shares its transaction list and block data with other nodes.

   4. A node that does not enforce local policies.

7. What does the Block Subsidy do?

   1. It manages the distribution of the issued supply of Bitcoin onto the ledger at a predictable rate.

   2. It keeps the cost of transactions low for network users.

   3. It ensures miners will have revenue to run the network until at least 2140.

   4. All of the above.

8. What happens to nodes that attempt to issue bitcoins to themselves that are in violation of the Block Subsidy Rule?

   1. Their blocks will be rejected as invalid.

   2. Those bitcoins will become invalid and unspendable.

   3. They will be disconnected from the network and referred to authorities.

   4. All of the above.