Incentive - Assessment 1

1. What is the first transaction of any block called and what is its significance?

   1. The first transaction of any block is called the Coinmine Transaction and it is used by the block builder to cover the cost of the proof-of-work used to build that block.

   2. The first transaction is called the Bitbase Transaction and it is used by the miner which has won a block to receive its reward.

   3. The first transaction is called the Coinbase Transaction and it is used by the block winner to allocate the block rewards to their own accounts and provides means for additional functions such as node identification.

   4. The first transaction is called the Input Transaction and it is used by the block winner to allocate the block rewards to their own accounts and provides means for additional functions such as node identification.

2. What must the value of the outputs be equal to or less than in a coinbase transaction.

   1. The outputs must be equal to or less than the value of all the transaction fees.

   2. The outputs must be equal to or less than the inputs not including the transaction fees.

   3. The outputs must be equal to or less than the value of all the transactions in the block.

   4. The outputs must be equal to or less than the sum of the block subsidy and all of the transaction fees from the transactions in the block.

3. What will happen if a node fails to include coins in the new coin distribution?

   1. Those coins are lost forever.

   2. Those coins will not enter circulation at that time.

   3. The node can retrieve them in the next block they win.

   4. It is inconsequential.

4. What does the Coin Distribution subsidize?

   1. The funding of faucets.

   2. It subsidizes the transaction fees.

   3. Developer funding to build and modify the protocol.

   4. The build-out of network infrastructure and incentivizes nodes to participate in processing transactions despite low usage.