Bitcoin Payment Protocols Quiz

1. What is the protocol specified in BIP 70, 71, 72, and 73 known as?

• The payment method.
• The payment protocol.
• The transfer protocol.
• The transaction protocol.

2. How does the payment protocol enhance Bitcoin transactions?

• It makes Bitcoin transactions anonymous and untraceable.
• It limits transaction sizes to prevent network congestion.
• It adds additional features by replacing Bitcoin addresses with small files that can encode more complex parameters.
• It removes the need for miners by automating the transaction process.

3. Why is the binary cookie-like field important in payment transactions?

• It provides a unique identifier for each transaction.
• It encrypts payment data for extra security.
• It allows merchants to implement stateless backends.
• It reduces the number of confirmations needed.

4. What functionality does the payment protocol optionally provide regarding signatures?

• The ability to transmute Bitcoin into various altcoins instantly.
• The ability to sign all payment requests and transactions using X.509 digital certificates.
• The ability to process direct debit payments without merchant intervention.
• The ability to create unlimited transactions without fees.

5. How does digital signing within the payment protocol prevent attacks?

• It requires a physical copy of the payment request for verification.
• It stores payment requests on a central server for safe access.
• It encrypts the payment information to hide it from attackers.
• It prevents a man-in-the-middle attack by ensuring that the payment request and transactions cannot be altered.

6. What is meant by a proof of payment in the context of Bitcoin?

• A transaction receipt.
• A proof of payment.
• A digital invoice.
• A payment confirmation.

7. What role does a proof of payment serve for buyers and sellers?

• It functions as a warranty guarantee for future repairs on a product sold.
• It acts as an invoice that details the cost and item description of purchases.
• It works as a membership card for frequent buyer discounts and offers.
• It serves as a receipt for dispute mediation and proving a purchase without the merchant needing to keep exhaustive databases.

8. How can a payment request be initiated according to the payment protocol?

• It is initiated by calling the merchant’s customer service line for assistance.
• It can be initiated by clicking a Bitcoin URI with an “r” parameter containing a URL to a payment request file or by opening a payment request file directly.
• It must be started by sending a direct Bitcoin transfer to the merchant`s wallet address.
• It requires the user to manually write a check to the merchant before sending.

9. What information is contained within the outer message of a payment request?

• It contains the time and date of the transaction.
• It contains the payment recipient`s personal information.
• It contains optional signature and certificate data.
• It contains only transaction amount details.

10. What essential details does the core message of a payment request include?

• It lists the transaction history for the customer.
• It contains the details of the requested payment.
• It shows the total number of transactions made.
• It includes the merchant’s contact information.

11. In what format is the core message of a payment request stored?

• JSON format
• Text format
• XML format
• Binary form

12. What occurs after creating a series of Bitcoin transactions in the payment protocol?

• A Payment message is formatted and uploaded to the destination URL.
• The blockchain is updated with the transaction details.
• A confirmation email is sent to the user.
• The wallet is automatically disconnected from the network.

13. What should a wallet app do when it encounters a HTTP URL in a QR code?

• It should do an HTTP[S] GET to that URL with a special HTTP header asking the server for a payment request.
• It should display an error message to the user.
• It should send a Bitcoin transaction directly to the URL.
• It should ignore the URL and do nothing.

14. What benefit does presenting a QR code with an HTTP URL offer to users?

• It allows users to print large invoices easily.
• It reduces the amount of data required for transactions.
• It makes QR codes easier to scan in bad lighting.
• It provides a simple way to access payment details.

15. How does BIP 73 relate to the functionality of QR codes?

• It describes how to generate QR codes for Bitcoin addresses.
• It specifies how a wallet app should handle an HTTP URL found in a QR code.
• It outlines marketing strategies for promoting Bitcoin QR codes.
• It regulates the design standards for QR code artwork.

16. What scalability issue does the Lightning Network resolve for Bitcoin?

• It makes mining Bitcoin more efficient and less energy-intensive.
• It adds an extra layer to the Bitcoin network by allowing users to set up payment channels for thousands of small and medium-sized transactions.
• It increases the block size limit to accommodate more transactions.
• It replaces Bitcoin with a completely new cryptocurrency.

17. What initiates a payment channel within the Lightning Network?

• Anchor transaction
• PaymentACK message
• Payment channel closing
• Digital signature

18. What constitutes micropayments in the context of the Lightning Network?

• They are transactions that only occur during the closing of a payment channel.
• They are complex transactions involving multiple parties.
• They are large transactions requiring multiple confirmations.
• They are small transactions that happen instantly within a payment channel.

19. How are payment channels regulated within the Lightning Network?

• Each transaction requires approval from the entire network.
• Payment channels are completely decentralized without any agreement.
• Channels are regulated by an external governing body.
• Users negotiate transactions within their payment channels.

20. What is the function of timelocks in payment channels?

• They set a timeframe for closing payment channels.
• They require all nodes to verify channel transactions.
• They guarantee instant transaction confirmations.
• They allow unlimited channel openings for users.

21. What do asymmetric revocation commitments help to prevent in the Lightning Network?

• Slow payment processing
• Increased transaction fees
• Loss of transaction history
• Cheating attempts

22. What distinguishes transactions in the Lightning Network from standard Bitcoin transactions?

• Lightning Network transactions require full blockchain verification.
• Lightning Network transactions are solely recorded on the main blockchain.
• Lightning Network transactions are off-chain and can occur instantly.
• Lightning Network transactions must have approval from all participants.

23. How does the Lightning Network improve transaction speeds?

• It increases block size limit to allow more transactions in each block.
• It significantly accelerates transactions by not requiring approval from all nodes for each transaction.
• It reduces transaction fees drastically by eliminating miners.
• It Centralizes transaction processing by using a single verifier.

24. What blockchain activity occurs upon opening and closing a Lightning Network payment channel?

• Updating the transaction on the blockchain
• Creating a new Bitcoin
• Issuing a token
• Burning coins

25. How do payment conduits function within the Lightning Network?

• They simplify the transaction process by reducing required confirmations.
• They operate as digital wallets for holding user funds securely.
• They establish direct connections between users that handle transaction routing.
• They process multiple transactions at once, increasing efficiency.

26. What is the impact of combining payment conduits in the Lightning Network?

• It limits transaction size to prevent network congestion.
• It slows down the confirmation of transactions on the blockchain.
• It simplifies the processing of large transactions only.
• It creates a network of interconnected payment channels that can route transactions efficiently.

27. What is the term for broadcasting signed messages to the network via Bitcoin wallet software?

• Wallet confirmations
• Transaction packets
• Proposed transactions
• Digital receipts

28. What happens to a transaction that breaches Bitcoin`s protocol rules?

• It is ignored by the network.
• It is sent back to the sender for revision.
• It is added to a special transaction pool.
• It is automatically approved by miners.

29. How is consensus within the Bitcoin network achieved?

• Nodes randomly select a leader to make decisions.
• Each node on the network verifies the results of a proof-of-work operation.
• The network relies on a central authority for consensus.
• Miners vote on transactions to approve them.

30. What does simplified payment verification (SPV) allow users to do?

• It allows users to create new bitcoin wallets automatically.
• It allows users to mine bitcoin without any hardware.
• It allows users to send payments quickly without verification.
• It allows users to verify bitcoin payments without running a full network node.