Bitcoin Layer 2 Technologies Overview Quiz

1. What is a Bitcoin Layer 2?

• A form of Bitcoin mining.
• A type of Bitcoin wallet.
• A solution to enhance Bitcoin`s transaction capacity off-chain.
• A Bitcoin trading strategy.

2. How do Bitcoin L2s function?

• Bitcoin L2s function as their own execution environments and can use their own consensus mechanisms.
• Bitcoin L2s increase the block size of Bitcoin to enhance speed and efficiency.
• Bitcoin L2s operate entirely on the Bitcoin main chain without utilizing off-chain solutions.
• Bitcoin L2s combine multiple transactions into a single block but do not change consensus mechanisms.

3. What is the primary benefit of Bitcoin L2s?

• Higher transaction throughput.
• Enhanced user anonymity features.
• Increased security measures.
• Complex smart contract capabilities.

4. What technical limitations do Bitcoin L1s face?

• Bitcoin L1s face limitations such as the lack of Turing-completeness.
• Bitcoin L1s can execute any programming language.
• Bitcoin L1s allow for infinite transaction speeds.
• Bitcoin L1s have unlimited block size.

5. How do Bitcoin L2s integrate with other blockchains?

• Bitcoin L2s merge directly with Bitcoin`s main chain for data processing.
• Most Bitcoin L2s are EVM equivalent or compatible, enabling them to integrate apps from other EVM blockchains.
• Bitcoin L2s only operate independently without any connections to other networks.
• Bitcoin L2s require users to convert assets manually before integration with other chains.

6. What types of bridge mechanisms do Bitcoin L2s use?

• Bitcoin L2s use traditional bank transfers and public key infrastructure.
• Bitcoin L2s use single-signature and one-party-custody payment channels.
• Bitcoin L2s use credit card processing and centralized APIs.
• Bitcoin L2s use multi-signature and multi-party-custody (MPC) wallet schemes, and third-party bridges.

7. What is BitVM?

• BitVM is a type of transaction fee on the Bitcoin network.
• BitVM is a Layer 1 solution for Bitcoin transactions.
• BitVM is an off-chain Turing-complete virtual machine compatible with Bitcoin.
• BitVM is a new cryptocurrency independent of Bitcoin.

8. How does the trust assumption work in BitVM bridges?

• The trust assumption in BitVM bridges requires all operators to be online simultaneously for users to exit the bridge.
• The trust assumption in BitVM bridges relies on the users’ complete trust in third-party validators for all transactions.
• The trust assumption in BitVM bridges involves a 1-of-n trust assumption where only 1 honest bridge operator needs to be online for users to exit the bridge.
• The trust assumption in BitVM bridges mandates a 2-of-3 trust assumption for users to successfully exit the bridge.

9. What is the requirement for MPC and multi-signature bridges?

• All signers must be present
• At least 75% of signers need to agree
• Over 50% of signers must be honest
• Only 30% of signers must be trusted

10. What is the purpose of Layer 2 scaling solutions?

• Create a completely new blockchain network.
• Eliminate all transaction fees completely.
• Increase block size limit and capacity.
• Improve blockchain efficiency and performance.

11. How do Layer 2 solutions address scalability challenges?

• They shift all transaction validation responsibilities entirely to external entities outside the blockchain.
• They require users to execute all transactions directly on the base layer without any improvements.
• They offload heavy computation associated with transaction execution from the base layer, executing many transactions and batching them together.
• They increase the size of blocks in the main chain to allow more transactions.

12. What is the result sent to the base layer by Layer 2 solutions?

• A summary of network fees collected
• A record of user identities and balances
• A proof or a compressed version of the transactions
• A detailed ledger of all transactions

13. What benefits do Layer 2 solutions offer?

• Enhanced block timing, reduced transaction verifiability, and better anonymity measures.
• Greater mining rewards, enhanced consensus algorithms, and stronger network effects.
• Higher transaction throughput, reduced transaction costs, faster transaction finality, and improved privacy.
• Increased block size, lower hash rates, and improved centralization.

14. How do Layer 2 solutions minimize gas fees?

• By increasing block sizes on the main blockchain.
• By eliminating the need for transactions altogether.
• By processing transactions off-chain, Layer 2 solutions minimize gas fees associated with on-chain transactions.
• By relying solely on centralized authorities for transaction validation.

15. What is state channel technology?

• State channels cannot interact with other blockchain networks.
• State channels only store user data on the main chain.
• State channels record transactions off-chain and settle on the main chain.
• State channels require all transactions to be on-chain for verification.

16. How does the Bitcoin Lightning Network operate?

• The Bitcoin Lightning Network uses state channels to record transactions off-chain and then settles the final state on the main chain.
• The Bitcoin Lightning Network processes all transactions on the main chain without any off-chain components.
• The Bitcoin Lightning Network relies solely on increased block sizes to improve transaction speed.
• The Bitcoin Lightning Network uses sharding techniques to divide transactions across multiple chains.

17. What are the types of Layer 1 blockchain scaling solutions?

• Token locking, cross-chain swaps, and simplification layers.
• Multi-signature wallets, off-chain storage, and decentralized exchanges.
• Sidechains, layer nesting, and atomic swaps.
• Increased block size, state channels, and sharding.

18. What is an example of a Layer 1 scaling solution?

• Introducing new cryptocurrencies like Dogecoin.
• Increasing gas fees on the Ethereum network.
• Launching the Bitcoin Cash fork.
• Ethereum`s transition to proof-of-stake.

19. What is the role of Layer 2 in the blockchain ecosystem?

• Layer 2 solutions restrict the number of transactions processed at once.
• Layer 2 solutions slow down transaction times on the main chain.
• Layer 2 solutions store all data on the main blockchain network.
• Layer 2 solutions enable faster and cheaper transactions by processing off-chain.

20. What is the CKB chain designed to operate as?

• A centralized exchange platform
• A privacy-focused network for NFTs
• Decentralized storage for data
• Layer 2 solution atop the Bitcoin network

21. What are the benefits of using Layer 2 networks in Bitcoin?

• They enhance scalability and transaction speed, expanding Bitcoin`s utility beyond a store of value.
• They eliminate the need for miners entirely, reducing decentralization.
• They make Bitcoin transactions completely anonymous and untraceable.
• They require users to change their Bitcoin wallets entirely for compatibility.

22. What is the dual-layer approach of the CKB chain?

• The dual-layer approach focuses solely on enhancing transaction speeds without addressing security concerns.
• The dual-layer approach eliminates the need for smart contracts in all transactions while increasing speed.
• The dual-layer approach allows for efficient transaction processing and cross-chain interactions while ensuring high security and decentralization.
• The dual-layer approach integrates only private chains to enhance user anonymity and privacy.

23. How do sidechains address scalability issues?

• Sidechains operate completely independently without any connection to the main chain.
• Sidechains eliminate the need for transaction verification altogether.
• Sidechains create larger blocks on the main chain.
• Sidechains process transactions off-chain and then settle the final state on the main chain.

24. What are rollups in the context of Layer 2 solutions?

• Rollups eliminate the need for security.
• Rollups bundle transactions for efficiency.
• Rollups increase block sizes directly.
• Rollups require new consensus mechanisms.

25. What is the primary challenge faced by blockchain networks?

• Security
• Privacy
• Complexity
• Scalability

26. How do Layer 2 solutions enhance blockchain scalability?

• By processing transactions as batches rather than one at a time, enabling faster and cheaper transactions.
• They increase the block size, allowing more transactions per block.
• They replace the need for the base layer completely with no on-chain validation.
• They require all transactions to be validated on the main chain first.

27. What is the significance of state channels in Layer 2 solutions?

• State channels increase network congestion by processing more transactions on-chain.
• State channels allow direct cryptocurrency mining on the main chain for easy validation.
• State channels eliminate the need for any off-chain transaction processing entirely.
• State channels offer increased privacy by keeping transaction details off-chain and only settling the final state on the main chain.

28. What is the role of third-party bridges in Layer 2 solutions?

• Third-party bridges increase gas fees on Layer 1 transactions.
• Third-party bridges only allow for storage of BTC off-chain.
• Third-party bridges create new tokens on the Layer 1 blockchain.
• Third-party bridges facilitate the movement of BTC from the base layer to the L2.

29. What is the difference between multi-sig and MPC wallet schemes?

• Multi-sig uses a single key for all transactions, while MPC uses multiple keys for each transaction.
• Multi-sig wallets are only for Bitcoin, while MPC wallets can be used for any cryptocurrency.
• Multi-sig requires all signers to be online, whereas MPC allows for offline signing during transactions.
• Multi-sig requires collective agreement among signers, while MPC allows for distributed signing without full agreement.

30. What is the purpose of BitVM in Bitcoin L2 solutions?

• Replace the Bitcoin main chain transactions.
• Enable trust assumptions in bridge mechanisms.
• Improve transaction fees on Layer 1.
• Increase block size for Bitcoin.