Cryptocurrency Mining and Transaction Lifecycle 3 — Questions and Answers
Question 1: What is the primary role of a 'full node' in a cryptocurrency network?
- To generate new coins through mining
- To store only block headers for lightweight verification
- To independently validate and relay every transaction and block (Correct answer)
- To act as a centralized server for wallet addresses
Correct answer: To independently validate and relay every transaction and block
Full nodes download and independently verify the entire blockchain, enforcing consensus rules without trusting any third party.
Question 2: What triggers the automatic adjustment of Bitcoin's mining difficulty?
- A vote among mining pools
- Every 2,016 blocks to target a 10-minute average block time (Correct answer)
- Each time a new miner joins the network
- Every 1,000 transactions confirmed on the network
Correct answer: Every 2,016 blocks to target a 10-minute average block time
Bitcoin adjusts difficulty every 2,016 blocks (approximately every two weeks) to maintain an average block interval of 10 minutes.
Question 3: In a UTXO-based blockchain like Bitcoin, what must a sender prove to spend funds?
- Their account balance exceeds the transaction amount
- They know the private key corresponding to the UTXO's locking script (Correct answer)
- The recipient's wallet is active on the network
- A majority of nodes approve the transaction
Correct answer: They know the private key corresponding to the UTXO's locking script
To spend a UTXO, the sender must provide a valid digital signature proving ownership of the private key that matches the UTXO's public key hash.
Question 4: What is 'merge mining'?
- Combining two separate mining rigs into one system
- Mining two different cryptocurrencies simultaneously using the same proof-of-work (Correct answer)
- Merging multiple mining pools into a single entity
- Using multiple algorithms to mine a single coin
Correct answer: Mining two different cryptocurrencies simultaneously using the same proof-of-work
Merge mining (AuxPoW) allows miners to mine a parent chain and a child chain simultaneously without extra computational work.
Question 5: What is the significance of 6 confirmations in Bitcoin?
- It is the number of nodes required to validate a transaction
- It represents the block where mining reward halves
- It is the threshold at which a transaction is considered practically irreversible (Correct answer)
- It is the number of signatures required in a multisig wallet
Correct answer: It is the threshold at which a transaction is considered practically irreversible
Six confirmations means six blocks have been added on top of the block containing a transaction, making a double-spend attack statistically impractical.
Question 6: What is the function of a 'coinbase transaction' in a Bitcoin block?
- It transfers funds from Coinbase exchange to miners
- It is the first transaction in a block that rewards the miner with newly created coins and fees (Correct answer)
- It records the block's hash for the next block
- It is the transaction that triggers difficulty adjustment
Correct answer: It is the first transaction in a block that rewards the miner with newly created coins and fees
The coinbase transaction is a special first transaction in each block that creates new Bitcoin and awards it, along with collected fees, to the winning miner.
Question 7: Which attack requires an entity to control more than 50% of a network's hash rate?
- Sybil attack
- Eclipse attack
- 51% attack (Correct answer)
- Replay attack
Correct answer: 51% attack
A 51% attack requires majority hash rate control, enabling the attacker to reorganize recent blocks and potentially double-spend transactions.
Cryptocurrency Mining and Transaction Lifecycle 3
What is the primary role of a 'full node' in a cryptocurrency network?