Atomic Swaps in Bitcoin Quiz

1. What is an Atomic Swap?

• An Atomic Swap is a type of cryptocurrency wallet used for storage.
• An Atomic Swap is a method to mine cryptocurrencies more efficiently.
• An Atomic Swap is a trading platform for non-fungible tokens (NFTs).
• An Atomic Swap is an exchange of cryptocurrencies from separate blockchains without the need for centralized intermediaries.

2. What is the primary goal of Atomic Swaps?

• To simplify user registrations
• To remove centralized intermediaries
• To increase transaction fees
• To convert fiat currencies easily

3. What is Hash Time-Locked Contract (HTLC)?

• A simple agreement between two parties to share funds without any conditions.
• A class of payments that use hash-locks and time-locks requiring the receiver to acknowledge payment prior to a deadline.
• A type of contract that is automatically executed without human intervention.
• A digital receipt that confirms the ownership of a cryptocurrency.

4. What is Time-Locked Contract?

• A contract that prevents any party from accessing their funds indefinitely.
• A contract that locks a transaction for a specific period, ensuring the transaction happens as agreed by both parties.
• A contract that allows transactions to happen instantly without any delays.
• A contract that requires both parties to meet in person to finalize the transaction.

5. How does an Atomic Swap transaction proposal begin?

• The initiator proposes a trade outlining the details, including the amount and type of cryptocurrency to be swapped.
• The initiator transfers funds directly to the participant before the proposal.
• The participant creates a new blockchain for the transaction.
• Both parties agree on a centralized exchange to process the trade.

6. What is the role of HTLC in an Atomic Swap?

• The initiator locks the entire transaction without the participant`s consent.
• The initiator creates an HTLC and sends the proposed cryptocurrency, generating a hash and cryptographic puzzle for the participant to solve.
• The initiator creates a traditional escrow account to hold the funds during the swap.
• The initiator transfers the cryptocurrency directly to the participant without conditions.

7. What does the participant do after receiving the HTLC?

• The participant verifies the transaction details and creates their own HTLC.
• The participant immediately completes the transaction without checks.
• The participant sends their funds to a random address.
• The participant cancels the transaction and withdraws the funds.

8. What happens during Solution Sharing in an Atomic Swap?

• The initiator sends a new proposal for a different trade.
• The participant solves the initiator`s cryptographic puzzle, sharing the solution with the initiator.
• The funds are transferred instantly to a central exchange.
• The participant must wait for external verification of the transaction.

9. What is the purpose of creating a contract in an Atomic Swap?

• To specify the terms of the transaction, including the amount of cryptocurrency to be traded and a unique cryptographic hash value.
• To maintain a public ledger of all transactions and identify the users involved in the swap.
• To create a centralized authority for overseeing the transaction process and ensuring compliance.
• To allow unlimited time for both parties to change their minds about the transaction terms.

10. How does Alice lock her funds in an Atomic Swap?

• Alice keeps her funds in her wallet for a fixed duration without locking them.
• Alice locks her funds into the contract using her private key, setting a time limit for the transaction to be completed.
• Alice transfers her funds to a public address for maximum security during the swap.
• Alice secures her funds by sending them to a centralized exchange account.

11. What does Alice do after locking her funds?

• Alice cancels the transaction immediately.
• Alice waits for Bob to initiate the transaction.
• Alice withdraws her locked funds.
• Alice shares the contract address with Bob.

12. What does Bob do after receiving the contract address?

• Bob ignores the contract address and moves on.
• Bob verifies the contract address and the locked funds.
• Bob cancels the transaction immediately.
• Bob shares the contract address with Alice.

13. What happens if either party fails to unlock the funds within the time limit?

• The funds are permanently lost and cannot be retrieved.
• A penalty fee is deducted from the funds for the delay.
• The trade is automatically canceled, and the funds return to their original owners.
• The transaction is delayed but eventually completes later.

14. What is the benefit of using atomic swaps over centralized exchanges?

• Atomic swaps require approval from centralized authorities before transactions can occur.
• Atomic swaps reduce the need for lengthy series of steps and transaction fees associated with centralized exchanges.
• Atomic swaps increase transaction fees compared to centralized exchanges.
• Atomic swaps are slower due to multiple intermediaries involved.

15. How do atomic swaps use smart contracts?

• Atomic swaps use smart contracts that lock or burn the original tokens and issue new ones on the corresponding blockchains.
• Atomic swaps depend on third-party platforms that handle the cryptocurrency exchange and guarantee fund safety.
• Atomic swaps apply smart contracts that allocate funds based on the user`s trading history and reputation score.
• Atomic swaps utilize middleware that processes the transactions through a centralized server for efficiency.

16. What is the term `atomic` referring to in atomic swaps?

• The transaction either happens or it doesn`t.
• The transaction is delayed for further verification.
• The transaction requires multiple confirmations.
• The transaction can be reversed after completion.

17. What is the role of decentralized exchanges (DEXs) in atomic swaps?

• DEXs provide insurance for trades executed through them.
• DEXs act as custodians for the users` funds during trades.
• DEXs require user verification for all transactions.
• DEXs can facilitate peer-to-peer trades without central intermediaries.

18. How do atomic swaps ensure trustless exchanges?

• Atomic swaps use escrow services that hold the funds until both parties confirm the transaction manually.
• Atomic swaps rely on centralized exchanges to manage trust issues and guarantee transaction completion.
• Atomic swaps use HTLCs and smart contracts to automate the exchange process, ensuring that each party agrees to the transaction before a timer runs out.
• Atomic swaps depend on third-party validators to ensure both parties fulfill their obligations during the exchange.

19. What happens during the transaction completion phase of an atomic swap?

• Both parties subtract transaction fees from their balances at once.
• Bob can send Alice a confirmation message to complete the swap.
• Alice and Bob must create new accounts to finalize the trade.
• Alice can unlock Bob`s funds using her private key.

20. What is the significance of using Hashed Time Lock Contracts (HTLCs) in atomic swaps?

• HTLCs provide an extra layer of fees for transactions.
• HTLCs automatically convert tokens to fiat currency.
• HTLCs ensure timely execution of the swaps.
• HTLCs are used solely for off-chain transactions.

21. How do atomic swaps facilitate peer-to-peer trading mechanisms?

• Atomic swaps facilitate peer-to-peer trading by allowing users to exchange cryptocurrencies directly without the need for trusted third parties.
• Atomic swaps require users to deposit their funds into a third-party wallet before trading.
• Atomic swaps mandate the use of traditional banking systems to facilitate the trades.
• Atomic swaps create a centralized exchange to trade tokens for users with higher security.

22. What is the primary mechanism behind atomic swaps?

• Peer-to-peer messaging
• Smart contracts that lock or burn tokens
• Digital wallets storing cryptocurrencies
• Centralized exchanges where trades occur

23. What are the benefits of using atomic swaps?

• Atomic swaps restrict users to exchanging cryptocurrencies within the same blockchain.
• Atomic swaps eliminate the need for any form of verification in transactions.
• Atomic swaps are faster and generally cheaper than going through exchanges or other token swap service providers.
• Atomic swaps increase reliance on centralized exchanges to facilitate trades.

24. Are atomic swaps anonymous?

• Atomic swaps require user identification.
• In most cases, atomic swaps are pseudonymous.
• Atomic swaps are fully anonymous.
• Atomic swaps are entirely open and public.

25. How do atomic swaps handle failed transactions?

• The funds remain locked indefinitely until both parties agree.
• The losing party pays a penalty fee to the winning party.
• The trade is automatically canceled, and the funds return to their original owners.
• The transaction is completed regardless of the time limit set.

26. What is the process for exchanging ETH for BTC via an atomic swap?

• Create a transaction wallet, exchange ETH for BTC, and share keys.
• Open a crypto exchange, sell ETH for USD, and buy BTC with it.
• Generate an HTLC smart contract, deposit ETH, and confirm BTC deposit.
• Transfer ETH to a friend, have them send BTC back, and confirm securely.

27. What happens if either party fails to retrieve the other’s funds before the deadline?

• The funds are permanently lost to both parties.
• The funds are transferred to a third party as a penalty.
• The transaction is completed anyway, regardless of the deadline.
• The transaction is canceled, and the funds return to their original owners.

28. How do atomic swaps reduce inefficiencies in cryptocurrency exchanges?

• Atomic swaps use physical cash to facilitate exchanges between users.
• Atomic swaps remove the need for intermediaries, streamlining transactions.
• Atomic swaps rely on manual processes to complete trades efficiently.
• Atomic swaps require a third-party verification for every transaction.

29. What is the role of smart contracts in facilitating atomic swaps?

• Smart contracts automate the exchange by locking or burning tokens.
• Smart contracts collect transaction fees for each swap made.
• Smart contracts verify user identities before transactions proceed.
• Smart contracts create a marketplace for users to trade tokens.

30. How do atomic swaps ensure that each party agrees to the transaction?

• Atomic swaps rely on manual confirmations from each party before the transaction proceeds.
• Atomic swaps require third-party intermediaries to validate the agreement between parties.
• Atomic swaps use HTLCs and smart contracts to ensure that each party agrees to the transaction before a timer runs out.
• Atomic swaps enforce transactions only through verbal agreements between participants.