Bitcoin Lightning Network Features Quiz

1. What is the primary aim of the Bitcoin Lightning Network?

• To facilitate faster and more cost-effective Bitcoin transactions.
• To enforce strict regulations on Bitcoin exchanges.
• To centralize Bitcoin mining operations globally.
• To increase the supply of Bitcoin available in the market.

2. How does the Lightning Network achieve faster transactions?

• By reducing transaction fees on a centralized server.
• By creating off-chain payment channels between parties.
• By storing all transactions directly on the blockchain.
• By requiring multiple confirmations from network miners.

3. What happens to transactions within a Lightning Network channel?

• They are conducted off-chain, meaning they are not recorded on the Bitcoin blockchain.
• They are immediately recorded on the Bitcoin blockchain.
• They are stored permanently on users` devices.
• They are held in a separate Lightning Network blockchain.

4. What transactions are recorded on the blockchain in the Lightning Network?

• All transactions between users in real time.
• Only the payments made inside the network.
• Regular transactions conducted within the channel only.
• The initial creation of the channel and the final settlement.

5. How does the Lightning Network allow for transactions between parties without a direct channel?

• By making all transactions public on the blockchain.
• By utilizing end-to-end encryption for all payments.
• By routing the payment through interconnected channels.
• By requiring a central authority to manage the transactions.

6. What is the throughput of the Bitcoin Layer-2 Lightning Network compared to the Bitcoin network?

• The Bitcoin Layer-2 Lightning Network has a throughput as high as 1 million TPS.
• The Bitcoin Layer-2 Lightning Network has a throughput of around 100 TPS.
• The Bitcoin Layer-2 Lightning Network has no throughput as it operates offline.
• The Bitcoin Layer-2 Lightning Network has a throughput similar to the Bitcoin network at 7-10 TPS.

7. What is a proposed implementation of Hashed Timelock Contracts (HTLCs) in the Lightning Network?

• Static transaction routes.
• Bi-directional payment channels.
• Fixed payment segments.
• Single-direction payment lanes.

8. What allows payments to be securely routed across multiple peer-to-peer payment channels in the Lightning Network?

• Hashed Timelock Contracts (HTLCs)
• Payment Processors
• Smart Contracts
• Transaction Fees

9. What happens to payments within an established channel in the Lightning Network?

• Payments within an established channel can be made almost as fast as data can travel over the Internet between the two peers.
• Payments are recorded directly on the Bitcoin blockchain immediately.
• Payments must be verified by a third party before completion.
• Payments take hours to process due to blockchain confirmation times.

10. Does the Lightning Network require third-party trust for transactions?

• Yes, third-party intermediaries are needed for every transaction.
• No, it relies solely on external platforms for all transfers.
• Yes, transactions have to go through multiple banks for verification.
• No, the two peers in a channel pay each other directly using regular Bitcoin transactions.

11. What transactions need to be committed to the blockchain in the Lightning Network?

• Channel open transactions, channel close transactions, and (hopefully infrequent) anti-fraud respends.
• Only small micropayments between peers.
• Direct trades between different cryptocurrencies only.
• Only the initial funding transaction for opening the channel.

12. Can channels in the Lightning Network stay open indefinitely?

• No, channels must close within a month.
• No, they can only stay open for a week.
• Yes, but only for a few hours.
• Yes, channels can stay open indefinitely.

13. What is the Lightning Network in relation to the Bitcoin protocol?

• It is a type of wallet specifically for storing Bitcoin.
• It is a method for tracking Bitcoin prices in real-time.
• It is a scaling solution built on top of the Bitcoin protocol.
• It is a new cryptocurrency separate from Bitcoin.

14. What does the Lightning Network facilitate for users?

• Large, slow transactions between banks.
• Single, high-value transactions that require lengthy approvals.
• Smaller, near-instant payments between users at very low cost.
• Complex investment portfolios managed by brokers.

15. How does Alice open a payment channel with Bob in the Lightning Network?

• Alice sends a direct payment in Bitcoin to Bob`s wallet address.
• Alice trades physical cash with Bob to establish the channel.
• Alice makes an on-chain ‘funding transaction’ which dictates how much value Alice can transfer using Lightning.
• Alice creates a new Bitcoin wallet and shares it with Bob.

16. What happens to the funding transaction after it is confirmed on the base layer?

• Alice must wait for a confirmation on every transaction before proceeding.
• The funding transaction is converted into a stablecoin for faster processing.
• The funding transaction is deleted from the blockchain immediately.
• Alice is free to transact with Bob over Lightning as many times as she likes until one or both of them decide they want to close the channel.

17. What updates the current state of the channel in the Lightning Network?

• The network has to be reset to update the channel state.
• The Bitcoin price must change to update the channel.
• Only miners can update the channel state.
• Each lightning transaction updates the current state of the channel.

18. What happens when a channel is closed in the Lightning Network?

• All funds are lost, and neither party receives anything back.
• The channel status is reset and can be reopened at any time.
• The most recent channel state is broadcast to the Bitcoin network, and parties receive their balances.
• The channel is permanently deleted, and no transactions can be recovered.

19. Does the Lightning Network have its own blockchain?

• No, the Lightning Network is a network of payment channels all interlinked together.
• Yes, the Lightning Network has its own independent blockchain.
• Yes, it operates on a separate blockchain.
• Yes, it functions with multiple blockchains for transactions.

20. How does the Lightning Network ensure security?

• Security is ensured by requiring all payments to be processed on the Bitcoin blockchain.
• Security is achieved through lengthy delays for transaction confirmations.
• Security is enforced by blockchain smart-contracts without creating an on-blockchain transaction for individual payments.
• Security is guaranteed by implementing a central authority to manage transactions.

21. What is the payment speed measured in the Lightning Network?

• Payment speed is measured in minutes to hours.
• Payment speed is measured in hours to days.
• Payment speed is measured in milliseconds to seconds.
• Payment speed is measured in seconds to minutes.

22. What is the scalability of the Lightning Network?

• The Lightning Network is capable of millions to billions of transactions per second across the network.
• The Lightning Network can process only one transaction per second.
• The Lightning Network is limited to a few thousand transactions per second.
• The Lightning Network cannot handle any transactions at all.

23. What is the cost of transactions in the Lightning Network?

• Transactions are exceptionally low-cost because they are transacted and settled off-blockchain.
• Transactions incur a standard Bitcoin fee for every transfer.
• Transactions are free but take an extended time to process.
• Transactions require a high fee due to network congestion.

24. What is the purpose of cross-chain atomic swaps in the Lightning Network?

• Cross-chain atomic swaps allow for transactions across blockchains without trust in third-party custodians.
• Cross-chain atomic swaps increase Bitcoin transaction fees significantly across networks.
• Cross-chain atomic swaps enable free trading of non-blockchain assets across different platforms.
• Cross-chain atomic swaps allow for faster Bitcoin mining operations between networks.

25. How do participants create a ledger entry on the blockchain in the Lightning Network?

• Participants create a ledger entry through a monthly bank statement.
• Participants create a ledger entry by sending a transaction to a centralized server.
• Participants create a ledger entry which requires both participants to sign off on any spending of funds.
• Participants create a ledger entry by manually writing it in a shared document.

26. What happens to the ledger entry when it is closed?

• The most recent version of the ledger entry is broadcast to the blockchain, and both parties receive their relevant balance back to their wallet.
• The ledger entry is deleted from the blockchain entirely with no record.
• The ledger entry remains unchanged and is stored indefinitely.
• The ledger entry is sent to a separate server for future reference.

27. What is the role of nodes in the Lightning Network?

• Nodes are only responsible for mining new bitcoins in the network.
• Nodes exclusively store Bitcoin wallets and funds for users.
• Nodes are devices that record transactions on a separate blockchain.
• Nodes are computers that run the Bitcoin software and manage the network of payment channels.

28. What is the role of smart-contract scripting in the Lightning Network?

• Smart-contract scripting allows for unlimited cryptocurrency mining on the network.
• Smart-contract scripting facilitates complex trading instructions in centralized exchanges.
• Smart-contract scripting challenges the validity of blockchain transactions entirely.
• Smart-contract scripting enforces the atomicity of transactions and ensures that only the most recent version of the ledger entry is valid.

29. What is the benefit of using real Bitcoin/blockchain transactions in the Lightning Network?

• It creates a secure network of participants that can transact at high volume and high speed.
• It allows for transactions to be anonymous and untraceable.
• It makes all transactions irreversible and permanent.
• It completely eliminates all transaction fees for users.

30. How does the Lightning Network solve Bitcoin’s scalability problem?

• The Lightning Network solves Bitcoin’s scalability problem by handling billions of transactions a second compared to twelve per second for Bitcoin.
• It restricts Bitcoin transactions to a single channel only.
• It eliminates the need for cryptocurrency exchanges entirely.
• It resolves scalability by increasing the block size limit on the Bitcoin blockchain.