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CS120: Bitcoin for Developers Certification Exam Answers

Bitcoin is a decentralized digital currency that operates on a peer-to-peer network, utilizing blockchain technology. For developers interested in working with Bitcoin, there are several aspects to consider:

  1. Understanding Bitcoin Protocol: Developers should have a solid understanding of how the Bitcoin protocol works, including how transactions are created, broadcasted, and confirmed on the network. Familiarity with cryptographic concepts such as hashing and digital signatures is essential.
  2. Bitcoin Core: Bitcoin Core is the reference implementation of the Bitcoin protocol. Developers can contribute to its development, report bugs, or build applications that interact with the Bitcoin network using its APIs.
  3. Bitcoin APIs and Libraries: There are various APIs and libraries available for developers to integrate Bitcoin functionality into their applications. These include:
    • Bitcoin Core RPC (Remote Procedure Call) API: Allows developers to interact with a Bitcoin Core node programmatically.
    • BitcoinJS: A JavaScript library for Bitcoin scripting, transactions, and cryptography.
    • BitcoinJ: A Java library for working with Bitcoin.
    • Libbitcoin: A C++ library providing a variety of Bitcoin functions, including wallet management and transaction building.
    • Electrum: A popular Bitcoin wallet that also offers an API for developers to interact with its features.
  4. Wallet Development: Developers can create their Bitcoin wallets, allowing users to send, receive, and manage their funds. Wallet development involves implementing features such as key management, transaction creation, and address generation.
  5. Blockchain Development: Developers can build applications that utilize the Bitcoin blockchain for purposes other than financial transactions. This could include timestamping documents, creating decentralized identity systems, or building decentralized applications (DApps) on top of Bitcoin.
  6. Security Considerations: When working with Bitcoin, security is paramount. Developers should be aware of common security pitfalls such as private key management, transaction malleability, and double-spending attacks.
  7. Regulatory Compliance: Depending on the jurisdiction and nature of the application, developers may need to consider regulatory compliance issues such as anti-money laundering (AML) and know-your-customer (KYC) requirements.
  8. Community Involvement: The Bitcoin development community is active and welcoming to new contributors. Developers can participate in forums, mailing lists, and open-source projects to learn from others and contribute to the ecosystem.

Overall, working with Bitcoin as a developer offers a wide range of opportunities to explore blockchain technology, cryptography, and decentralized finance. However, it requires a solid understanding of the underlying principles and a commitment to security and best practices.

CS120: Bitcoin for Developers Exam Quiz Answers

  • A lack of a central authority to coordinate the network
  • A set of mining nodes that are designated as leader nodes
  • A clear and rigid structure that makes the network consistent
  • The Bitcoin ledger is updated to debit one account and credit another
  • Every 10 mins. miners vote on the appropriate balance for every account
  • Every transaction consumes one or more outputs, UTXOs, to create new outputs
  • Influence over the Bitcoin network is held equally between miners and software developers
  • There is no stable balance of power, as it constantly shifts between large businesses using the network
  • Developers, miners, wallets, merchants, and exchanges all hold influence and no one entity can dictate a change to Bitcoin
  • All transactions are approved by the network
  • Miners can join the network without approval from the mining council
  • Anyone can join the network and transactions can be created or sent without an intermediary
  • Transaction status refers to the complexity of a transaction, since transactions with many outputs are complex
  • Transaction status refers to whether or not a transaction has been “confirmed” and is included in the blockchain and the number of “confirmations” or proceeding blocks
  • Transaction status is a complex calculation that consists of the number of votes on the validity of that transaction from miners and the ratings that those voting miners currently have
  • They make it possible for any tampering of transaction data to be quickly detected
  • They encrypt transaction data making it nearly impossible to convincingly alter the original data
  • They allow for the quick summation and identification of data allowing a transaction in the wrong place to be easily discovered
  • It uses fewer server resources to encrypt and decrypt
  • It does not require a secure key transfer between users
  • It uses algorithms that are more secure than other forms of encryption
  • Public keys are public and private keys are private
  • Public keys are used to encrypt data, while private are used to decrypt and/or sign data
  • Public keys can be used to decrypt and/or sign data, while private keys are used to encrypt data
  • Private keys unlock the computing power on the network so that your transactions can be mined
  • The private key is required to sign a transaction to move Bitcoin from one address to another on the network
  • A private key is needed to locate your specific Bitcoin, otherwise your wallet will not be able to locate your coins on the vast Bitcoin network
  • A unique generator point is multiplied by 5 to create a private key
  • The private key, a number, is multiplied by the generator point to create the public key
  • The generator point is multiplied by different values to create both the public and private keys
  • The public key is derived from the private key
  • A public key is a number approximately three times the private key
  • Both the public and private keys are created at the same time from the same function
  • Nonrepudiation – proof that the holder of the private key signed the transaction
  • Validity – if a transaction is signed you can be sure that it will be accepted by the network as valid
  • Irreversibility – once a Bitcoin transaction is signed, it is guaranteed to be included in the blockchain
  • A very large prime number
  • A complex and unique mathematical formula
  • Two numbers commonly referred to as the R and S values
  • A hashing method used to hash a transaction prior to signing
  • A series of hashes applied to a signature prior to broadcasting the transaction
  • A way of indicating which part of a transaction’s data was used in the creation of a signature
  • RSA
  • PEM
  • ECDSA
  • Hash functions are the most secure encryption algorithms available
  • Hashing is a one-way function that can be used to obscure data while creating an identifier for it
  • Hash functions are simple but uncommon; their limited use makes working with them challenging thus helping to reduce Bitcoin’s attack surface
  • Finding a hash of a value requires time and power while verifying is quick and easy
  • Hashes are fast and easy to compute while decrypting them requires a specific key
  • Hashes are fast and easy to compute while verifying them requires a set of previous hashes
  • A blocks hash is used as a Block identifier
  • Transactions are hashed many times to securely encrypt them
  • Hashes are almost exclusively for producing correctly formatted Bitcoin addresses
  • Hashing is a one-way function that creates a unique identifier, yet is not feasibly reversible so won’t reveal the original data
  • Hashing is a two-way function that creates an identifier that is reversible so that the original data can be decrypted and accessed
  • Hashing is a multifaceted set of functions that can be used for a wide variety of purposes including to create arrays of transaction IDs
  • SHA256 encryption, as it is the most secure algorithm
  • Base58, as inaccurate transactions will not be properly encoded
  • Merkle Trees, as any change to any transactions is the tree would alter the final hash
  • Base58 is a variant of Base64
  • Base58 is closely related to hex encoding
  • Base58 is a more complex version of DER encoding
  • The prefix makes the address more easily machine readable
  • To differentiate between types of address which helps to prevent errors
  • To show which version of Bitcoin was being used when the address was created
  • A block header contains a version number, the previous block’s hash, the block’s Merkel root, a timestamp, the difficulty target, and a nonce
  • A block header contains a version number, the previous block’s Merkle Tree, the block’s number of transactions, a timestamp, the block height, and a nonce
  • A block header contains a Merkle root, the previous block’s hash, the block’s number of transactions, a timestamp, and a summary of the Proof-of-Work done to produce the block
  • DER
  • JSON
  • SQL
  • Bitcoin nodes sort transactions by priority level
  • Bitcoin nodes forward valid transactions to other nodes on the network
  • Bitcoin nodes route transactions according to their geolocation, sending transactions to nodes near the originating node
  • Download from two different sources
  • Verify the release signature on the software download
  • Create your own wallet seed by doing the math on a simple calculator
  • They also construct transactions, and sort network data by priority
  • They also sign transactions and collect fees from transaction validation
  • They also construct transactions, sign transactions, and track transactions
  • The signature and the transaction are always created simultaneously
  • The signature is created first and added to the transaction when it is ready
  • After a transaction has been created, the transaction data is used to create a signature
  • The unlocking scripts
  • The locking and unlocking scripts
  • The locking, unlocking, and mining scripts
  • An output of a transaction that is in the mempool waiting to be mined
  • An unavailable transaction output that cannot be spent until a future date
  • An output of a transaction that can be spent as an input in a new transaction
  • The transaction is added to the official node registry
  • The wallet will tell the top 5 nodes that it is connected to, who will tell the mining nodes that they are connected to
  • The wallet will tell all the nodes that it is connected to about the transactions, who will then tell all the nodes that they are connected to
  • JBOK
  • P2SH
  • P2PKH
  • Three checks: signature validation, output script validation and transaction history validation
  • When a non-mining node validates a transaction, only the signatures are checked; a mining node will run all available validation checks
  • Many checks, including checking that the inputs have not previously been spent, that the amount is valid, that there are appropriate signatures on inputs, and that the output scripts are valid
  • A soft fork carries a higher risk of network partition or split than a hard fork
  • A hard fork will partition or split the network if not all nodes are updated, while a soft fork allows un-updated nodes to remain on the network
  • A hard fork will partition or split the network if not all nodes are updated, while a soft fork will only partition the network if less than 80% of the nodes are updated
  • They alter invalid transactions to make them compliant with current network consensus rules
  • They must collect a signature from at least two full nodes before their block is considered valid
  • They validate all transactions and blocks against consensus rules to prevent the propagation of invalid data
  • The required double-hashing prevents fraud
  • All communication on the network is recorded by full nodes
  • Every block header contains both the hash of the previous block and the Merkle tree root
  • A hierarchical structure with tiers for each level of user
  • A flat structure where any node can talk to any other node
  • A variable structure that adjusts depending on the set of active participants
  • Government regulation prevents any one area from having too large a concentration of miners
  • Bitcoin maintains a rigid governance structure which allows for others in the ecosystem to vote on who can mine Bitcoin in each cycle
  • If miners were to implement consensus rules in disagreement with the rest of the ecosystem, the merchants, exchanges, and wallets would not accept any of the Bitcoin they have earned
  • The blockchain will process any valid transaction regardless of sender, receiver, or content
  • The blockchain will only process neutral transactions that don’t favor some miners over others
  • The blockchain has a majority of nodes in countries that are permissive towards blockchain technology
  • Symmetric encryption is more reliable
  • Asymmetric encryption does not require a key exchange
  • Asymmetric encryption uses newer, more secure encryption algorithms
  • A standard Bitcoin address is derived from a public key through a series of hash functions
  • A Bitcoin address is the hash of a secret number which is then encrypted with a public key
  • Both a publicand the corresponding private key are required to generate a Bitcoin address
  • Yes; the original message is recorded in the signature database
  • Yes; a signature will not be successfully verified with any message other than the original message that was signed
  • No; a cryptographic signature proves who the message is from but does not provide protection from message alteration
  • The original message, the signature, and the public key
  • The original message, and 5 or more signatures produced by the same private key
  • The original message, the signature, the public key, and the nonce used to create the signature
  • Parts of the transaction are encrypted
  • Transaction data includes only references in the inputs and signatures
  • To properly compile a transaction, you’ll need data from the previous 10 blocks
  • A signature validation script would return an error
  • It depends on how much of the message was changed
  • It depends if the public or private key was used in the validation function
  • While it is possible to guess the correct hash for a certain set of data, it takes a lot of computing power to create the hash
  • It is infeasible to guess what data will create a certain hash, but it’s very easy to verify that certain data was used to create a certain hash
  • Creating and verifying hashes require a big commitment of computing power, which makes them difficult to compute but also difficult to guess
  • The hashing algorithm used in mining is adjusted by the software every two weeks
  • The number of zeros that block hash must start with is voted on by all miners every 2016 blocks
  • The number of zeros that a block hash must start with is adjusted by the software every 2016 blocks
  • Base58
  • Merkle Trees
  • Proof-of-Work
  • Hashing was invented for the Bitcoin protocol
  • There are a wide variety of hashing algorithms available
  • There are currently only 3 hashing algorithms that are considered secure
  • A Merkle Tree is used to summarize all transactions in a block
  • A Merkle Tree is used to standardize the links between all blocks in the chain
  • A Merkle Tree is used to summarize the Proof-of-Work that went into creating a block
  • Hex is a much faster encoding process than Base64
  • Hex requires more computational power but is more secure
  • Hex works better than decimal for displaying binary values to humans
  • A checksum is part of the address creation process
  • A checksum is a standard and easily human-readable format
  • A checksum can detect a typo in a Bitcoin address helping to prevent errors
  • The previous block’s hash
  • The previous 10 block’s hashes
  • The previous block’s Merkle root
  • Base58 used for text, while Hex used more often for numbers
  • DER is used primarily for Bitcoin addresses, while Base64 is used for block headers
  • Data is transmitted on the Bitcoin network using SQL, while ASN.1 is used for hashing
  • Ropsten, testnet, and regtest
  • Mainnet, betanet, and Ropsten
  • Mainnet, testnet, or a local regtest network
  • An HD wallet uses a more secure private key as compared to JBOK wallets
  • An HD wallet allows for the backing up of all the keys created by the wallet with one piece of static data
  • HD wallets have an easier to remember Mnemonic seed while JBOK wallets have a much longer Mnemonic seed
  • Transactions fees are always a clear flat fee that is set every 144 blocks
  • Transactions fees are calculated from the difference between inputs and outputs
  • Transactions fees are dynamically calculated based on the value of the Bitcoin being transferred
  • The size of the transaction in kilobytes
  • The amount of the transaction in satoshis
  • The type of locking script used in the transaction
  • The state is known by all nodes on the network
  • All the information needed to execute a script is contained within the script
  • All the information needed to execute the script can be obtained after the script is decrypted
  • The selection is generally random
  • Miners will generally include transactions with the highest fees first
  • Miners will always include the transactions they saw first, first in, first out
  • They exclusively validate signatures on Bitcoin transactions
  • They can perform a variety of functions within a Bitcoin script
  • They are used to embed different types of data into the Bitcoin blockchain
  • Validation of the block header and the Merkle root
  • Signature validation of all transactions in the block
  • Signature validation, validation of the block header, and the Merkle root
  • Latency on the network
  • Mining nodes may crash
  • A partition or split of the network
  • The miner may disappear from the network
  • It may be found that the block was actually invalid
  • There may be some network disagreements of which block is next in the chain
  • The distributed ledger tracks the number of coins in each account and adjusts when a transaction occurs
  • The total value on the network is hard to track since each user is required to maintain their own accounts
  • Value is stored and transferred via Unspent Transaction Outputs (UTXOs) locked and unlocked via scripts
  • The large Bitcoin exchanges can approve which developers work on the core implementation
  • All Bitcoin miners must vote on any proposed software updates before any changes are added to the Bitcoin code repository
  • Bitcoin is an open-source project, so anyone can make their own version of it and others in the ecosystem can decide which version to run
  • Follow the steps outlined by the Bitcoin wallet, which provides users with all the necessary information
  • Find the transaction ID, visit a reputable blockchain explorer website, enter the ID in the search bar, check the transaction status and the number of confirmations
  • Find the transaction ID, use a Bitcoin command line interface to check which block the transaction was included in, search for that block in a blockchain explorer
  • Signatures are used to encrypt transaction data as a security measure
  • Signatures are used as a fixed length unique identifier of transaction data
  • Signatures are used to assure that a message is authentic and has not been tampered with
  • Anyone with a private key can encrypt data and validate the signature from a public key
  • Private keys include sensitive personal information that is required when generating the key
  • Anyone with a private key can sign messages and decrypt data encrypted with the matching public key
  • At least two public keys are used to create one Bitcoin address
  • Bitcoin addresses are often derived from a public key using a one-way function
  • Bitcoin addresses and public keys are derived using the same hashing functions
  • A hash function can be used to encrypt data
  • A hash can be used as a unique identifier of data
  • A hash can be used to delay the release of data via its encryption functions
  • Miners race to find a block hash that meets with the current network standards
  • Miners race to find the hashing algorithm that best fits the current block being mined
  • Miners race to find a hash for each transaction in the block that meets with the current network standards
  • Base58 is a more complex yet more secure version of hex
  • Base58 was created to provide an open-source version of Base64
  • Base58 removes easily confused characters helping to reduce the chances of typos
  • DER tags are very similar to hex tags which can create some confusion
  • DER uses a Tag-Length-Value format where the tag is often the type of data
  • DER tags are not widely used as they have been replaced with a key-value system
  • Bitcoin script is a fork of C++
  • Bitcoin script is a Forth-like reverse-polish notation stack-based execution language
  • Bitcoin script is a Forth-like reverse-polish notation object-oriented execution language
  • Every node validates every transaction
  • Only mining nodes validate all transactions
  • Non-mining nodes validate P2PKH transactions
  • A miner could only collect reduced fees on a double spend transaction
  • The network relies on the majority of miners being honest to prevent this issue
  • Miners would not benefit from including a double spend as that block would be rejected by the network
  • To move Bitcoin, a signature from both the public and private keys are required.
  • Bitcoin is locked to an address created from a public key. A signature from the corresponding private key is then required to move funds from that address.
  • Bitcoin is locked to an address created from a public key. To move funds from that address, the Bitcoin must first be decrypted using the corresponding private key.
  • The public key is used to encrypt data that can then only be decrypted using the corresponding private key
  • Both the public and private keys are used to encrypt data that can then only be accessed with the private key
  • A public key and a series of hashes are used to encrypt data, while the private key and the original hashed data is used to decrypt that data
  • Bitcoin uses a variety of curves in the creation of transaction signatures
  • There is only one working cryptographic signature algorithm that has not been compromised
  • There are many different algorithms and curves that can be used to generate cryptographic signatures
  • The hashing private key
  • The original data and the hashing algorithm used
  • An array of hashes produced with the same algorithm
  • Json
  • DER
  • XML
  • Because they can earn money from validating transactions
  • Because they wish to be able to independently validate all transactions on the network
  • Because running a full node will allow them to have their transactions treated as a priority
  • RPC
  • JSON
  • REST API
  • DER
  • Hex
  • RPC
  • P2PKH P2SH
  • P2KH, and HTLC
  • P2PKH and P2MH
  • The rounds of voting required take resources away from the network
  • It takes a lot of mining power for all the miners to vote on the changes
  • There is no centralized decision-maker and most participants need to support changes
  • Non-mining nodes can vote on the version of the data that they think is true
  • When miners have conflicting data, the “winning” miner’s version of history becomes the truth on the network
  • A random number generator is used to select the miner whose version of transaction history will be added to the blockchain

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