Combining and Splitting Value - Assessment 2

1. What it the typical arrangements of inputs in a transaction

   1. Transactions will typically involve a single large coin or several smaller coins spent into one or two outputs.

   2. An input can only be used in a transaction if it’s value matches the exact amount expected for the transaction.

   3. For every ten inputs into a transaction there is one output.

   4. The amount of outputs is equal to the amount of coins being spent.

2. What happens when a coin or combination of coins matching the exact value of the desired payment cannot be found in the user’s wallet?

   1. Each bitcoin is made up of many smaller coins called a ‘satoshi” that can be aggregated to form the exact value of a desired payment.

   2. The wallet breaks down coins into smaller amounts called a ‘satoshi’ allowing for the payment's exact value to be spent.

   3. The wallet sends coins to nodes requesting the exact payment amount to be provided for a small fee.

   4. The wallet collects any ‘change’ by creating a second output for the transaction containing the user’s wallet address. This extra coin is spent into a script and is immediately received back into the wallet’s balance as spendable funds.

3. What does ‘Fan Out’ refer to?

   1. A way to decrease the transaction fees by combining multiple inputs into a single output.

   2. A transaction that spends many small amounts of coin in order to provide more privacy.

   3. A transaction that depends on several transactions, and those transactions depend on many more.

   4. A transaction that triggers/initiates more transactions.

4. When a wallet is spending a transaction consisting of multiple inputs from multiple different transactions, what does the wallet need to know about each individual input?

   1. Nothing besides it’s transaction ID and index number.

   2. The input’s entire transaction history.

   3. The input’s dollar value.

   4. The input’s transaction history, transaction ID, and index number.

5. When is it necessary to have an input’s full history?

   1. In order to use that input in a transaction.

   2. Only when a user wants to validate a coin’s history for their own purposes outside of the Bitcoin network.

   3. When making sure that the input hasn’t been used in a double spend attack.

   4. When determining that input’s U.S dollar value.