Introduction Assessment 1

1.Mediation costs and processing fees make ___________ i) unprofitable for traditional payment processors while reversible transactions allow for fraud. Bitcoin solves these problems by using ___________ ii) to process large quantities of transactions including micropayments of $1 or less and provides ________ iii) transactions.

i) micropayments, ii) large blocks, iii) non-reversible

i) digital payments, ii) ASIC miners, iii) reversible

i) low fee transactions, ii) a distributed database, iii) fungible

i) running a node, ii) mining pools, iii) permanent

2.In the case of certain goods or services that are non-returnable which payment processing services best provide the necessary payment service for the merchant and why?

The non-reversibility of payment processors such as Paypal provides the best service.

The insurance provided by traditional payment processors such as Visa provides the best service.

The non-reversibility and low fees of Bitcoin, provides the best service.

The anonymous nature of off-chain payments backed by digital gold mean that the solution hasn’t been discovered yet

3.What is the main contributor to high transactional costs in regards to traditional and payment processors that does not exist in Bitcoin?

There are no trusted third parties in Bitcoin as each user operates a node allowing for the decentralization of trust and cheaper transactions.

Trusted third parties are inherently expensive for low value payments and Bitcoin does not require them.

Trusted third parties are inherently expensive and are unwelcome in Bitcoin.

The security and fraud protection merchants are provided by trusted third parties is expensive but unavailable in Bitcoin