Transactions Assessment 2

1.Each coin includes both a ________ i) and _________ ii) signed __________ iii) by the corresponding private key, it is computationally trivial to validate the users control over the given coin. This is a crucial element of the __________ iv) of the system as it means that a merchant can accept payments directly from users and validate their control over the coins without the need of a trusted third party.

i) input, ii) private key, iii) with a knowledge proof, iv) value

i) public key, ii) a knowledge proof, iii) with Elliptic Curve Digital Signature Algorithm, iv) peer to peer nature

i) private key, ii) Elliptic Curve Digital Signature Algorithm, iii) with a transaction, iv) sound monetary policy

i) Public key, ii) Elliptic Curve Digital Signature Algorithm, iii) with a knowledge proof, iv) decentralization

2.How is verification a crucial part of Bitcoin?

Verification allows merchants to directly accept and validate payment ownership claims from users without the need of a trusted third party.

Verification allows Bitcoin users to not be defrauded over the internet.

Verification allows Bitcoin to be acceptable to law enforcement scrutiny.

Verification proves that there will only ever be slightly under 21 million bitcoins.

3.____________ i) traditionally solved through centralized payment hubs designed to reduce the payment ownership verification and transfer to a single point of control making it difficult to fool, but expensive to operate, hard to scale, and slow. Bitcoin allows users to __________ ii) without a trusted third party. Allowing for cheap and secure__________ iii) at massive scale.

i) Peer-to-peer payments are, ii) trust other users, iii)microtransactions

i) Peer-to-peer payments are, ii) perform double spending, iii) payments

i) Double spend attacks are, ii) independently validate the network, iii) large payments

i) Double spending is, ii) independently verify and safely receive funds, iii) peer-to-peer transactions

4.T/F: Which statements are true?(only need to select one correct option to pass)

Because of bitcoin's decentralized nature users must run a node to be sure that they are not the target of a double spend attempt.

Bitcoin uses the First Seen Rule which ensures that it is the first seen transaction that spends a particular UTXO is the transaction which is accepted by the node.

Bitcoin is a solution to the double spending problem without the need for centralized decision making.

Because a double spend must occur within seconds to have any chance of success, it is very simple for merchants to reject transactions that attempt a double spend since they are readily detectable.

5.In a case where two conflicting transactions are introduced simultaneously onto the network with each seeking to spend the ___________ i) , the transaction that first reaches the network nodes which in aggregate have _____________ ii) , stands to be the version of the transaction which is written into a block. The other transaction will never be accepted into a block and as such can never become a permanent part of the __________ iii)

i) same UTXO, ii) the highest fee, iii) blockchain

i) same bitcoins, ii) the fastest internet connection, iii) Bitcoin network

i) same fee, ii) 10% of the network hashpower, iii) chain of blocks.

i) same input coins to different output destinations, ii) the most hashpower, iii) Bitcoin ledger