Introduction Assessment 2

1. Fraudulent activity using traditional payment processing systems creates which customer dilemma that is rectified by Bitcoin?

   a. Reversibility of transactions means that vendors require detailed records of often sensitive personal information in order to seek recourse for fraud. This creates security issues whereby honest customer’s information is often stolen or abused. Bitcoin solves this by being completely anonymous.

   b. Reversibility of transactions means that vendors require detailed records of what can be sensitive personal information in order to seek recourse for fraud. Often this creates security issues whereby honest customer’s information is stolen or abused. Bitcoin solves this by being uncensorable.

   c. Reversibility of transactions means that vendors require detailed records of what can be sensitive personal information in order to seek recourse for fraud. Often this creates security issues whereby honest customer’s information is stolen or abused. Bitcoin solves this by automatically providing detailed information about you when a transaction is made.

   d. Reversibility of transactions means that vendors require detailed records of what can be sensitive personal information in order to seek recourse for fraud. Often this creates security issues whereby honest customer’s information is stolen or abused. Bitcoin solves this because transactions are effectively permanent.

2.What do Bitcoin’s cryptographic knowledge proofs allow for?

The purchasing party to establish a firm basis of control over the money being used in a transaction.

The prevention of the recipient from being able to know the balance of your bitcoin wallet.

Complete anonymity without any evidence trail from which an identity can be derived.

The prevention of double spends

3.What kind of cryptographic knowledge proofs does Bitcoin utilize?

Digital signatures and non-interactive zero knowledge proofs (zk-Snarks).

Digital signatures and a fully featured scripting language

Ring signatures and other anonymizing systems such as mimblewimble.

Bitcoin is transparent and does not require cryptographic knowledge proofs.

4. By accepting Bitcoin payments, what can merchants quickly and simply do?

Validate that control of funds have been transferred to them.

Acquire new customers.

Mine new bitcoins.

Build blocks.

5.Besides the excessive cost there also exists significant __________ i) to using trusted third parties, as customers identity details often end up being stored in large merchant databases with their corresponding payment details. Merchants do not often spend the time or money needed to adequately _____________ ii) created situations where thousands or millions of customer details have been leaked, causing widespread __________ iii).

i) risk, ii) back up their data has, iii) data loss

i) time loss, ii) insure from loss resulting from attacks has, iii) loss

i) privacy and security risk, ii) secure this information and breaches have, iii) financial and identity theft

i) security risks, ii) prevent against security breaches, iii) transaction reversal