Bitcoin Mining on Transactions
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Questions and Answers

What is the main advantage of having a ledger in Blockchain technology?

  • Facilitates decision-making process
  • Prevents fraudulent claims and falsehoods
  • Provides reliable and important information
  • Reduces uncertainty and controversies (correct)

    • In the context of Blockchain technology, what problem does 'double spending' refer to?

  • Spending the same digital token more than once (correct)
  • Undisputed record of all transactions
  • Making fraudulent claims
  • Increased transaction fees

    • Why is the prevention of fraud considered an important aspect of using a ledger in Blockchain technology?

  • Facilitates decision-making process
  • Reduces uncertainty and controversies
  • Provides reliable and important information
  • Reduces fraudulent claims and falsehoods (correct)

    • What is a key feature of Ethereum Blockchain, as mentioned in the text?

    <p>Smart Contracts</p> Signup and view all the answers

    Which entity in the text is responsible for maintaining Ledger F in the Blockchain system?

    <p>Insurer F</p> Signup and view all the answers

    How does Blockchain technology impact operating efficiency according to the information provided?

    <p>Enhances consensus among participants</p> Signup and view all the answers

    What is the purpose of miners choosing transactions from the MemPool?

    <p>To maximize profits by selecting transactions with smaller sizes</p> Signup and view all the answers

    What is the significance of the 1MB block size in Bitcoin mining?

    <p>It determines the maximum number of transactions that can be confirmed in a block</p> Signup and view all the answers

    What happens to transactions once they are confirmed by miners?

    <p>They are removed from the MemPool and placed into the blockchain</p> Signup and view all the answers

    How do miners prioritize transactions in the MemPool for confirmation?

    <p>By choosing transactions with higher gas fees paid to miners</p> Signup and view all the answers

    What action do miners take after confirming a block of transactions?

    <p>They verify unconfirmed transactions in the MemPool</p> Signup and view all the answers

    Why are higher fees preferred by miners when selecting transactions?

    <p>To maximize profits and compensate for energy costs</p> Signup and view all the answers

    Which mechanism is known as Nakamoto consensus?

    <p>Proof of Work</p> Signup and view all the answers

    Which consensus mechanism excludes minorities?

    <p>Proof of Stake</p> Signup and view all the answers

    Which mechanism has the disadvantage of being slow and costly?

    <p>Delayed Proof of Work</p> Signup and view all the answers

    Which consensus mechanism is known for being centralized and gamable?

    <p>Delegated Proof of Stake</p> Signup and view all the answers

    Which mechanism is associated with fewer hardware costs?

    <p>Proof of Capacity</p> Signup and view all the answers

    Which consensus mechanism is focused on improving on Proof of Stake?

    <p>Proof of Importance</p> Signup and view all the answers

    What event in Bitcoin's history led to incompatibilities between part of the network using BDB and part using LDB?

    <p>Block 225430: Database change from Berkeley DB to LevelDB</p> Signup and view all the answers

    What was the outcome of the blockchain fork caused by the erroneous software update in Bitcoin's history?

    <p>Two separate blockchains grew temporarily</p> Signup and view all the answers

    Which term is used to describe the situation when different parts of the Bitcoin network were mining on different blockchain protocols due to the software update?

    <p>Forking Event</p> Signup and view all the answers

    What is the significance of block 74638 in Bitcoin's history?

    <p>It experienced an integer overflow bug similar to Y2K</p> Signup and view all the answers

    Which type of attack is mentioned as a potential security threat to distributed systems in the text?

    <p>Sybil Attack</p> Signup and view all the answers

    What specific challenge are distributed systems facing, as listed in the text?

    <p><em>Concurrency</em></p> Signup and view all the answers

    What is the main reason miners include as many transactions as possible in a block?

    <p>To ensure faster confirmation of transactions</p> Signup and view all the answers

    In the scenario provided, who are the first two miners to mine the transactions pool?

    <p>Bob and Joe</p> Signup and view all the answers

    Why do miners Bob and Joe choose transactions that are valid and pay them a fee?

    <p>To earn a reward for their mining efforts</p> Signup and view all the answers

    What is the purpose of Proof of Work (PoW) protocol in blockchain mining?

    <p>To determine which miner adds their block to the chain</p> Signup and view all the answers

    If both Bob and Joe's blocks are valid, how is the choice made between them?

    <p>By choosing the block created first</p> Signup and view all the answers

    What happens if both Bob's and Joe's blocks are chosen for addition to the chain?

    <p>A duplicate transaction may occur in the chain</p> Signup and view all the answers

    Study Notes

    Blockchain Technology Overview

    • A ledger in blockchain creates a secure, transparent, and immutable record of transactions.
    • Prevention of double spending ensures that digital currency is not spent more than once, maintaining trust in the system.
    • Fraud prevention through a ledger builds confidence among users, mitigating risks associated with transaction disputes.

    Ethereum Blockchain

    • A key feature of the Ethereum blockchain is its ability to support smart contracts, facilitating decentralized applications.

    Ledger Maintenance and Transaction Processing

    • Ledger F within the blockchain system is maintained by a distinct entity ensuring data consistency.
    • Blockchain enhances operating efficiency by streamlining processes and reducing reliance on intermediaries.
    • Miners select transactions from the MemPool to include in blocks, maximizing transaction fees and network utilization.

    Bitcoin Mining and Transaction Confirmation

    • The 1MB block size in Bitcoin mining limits the number of transactions per block, affecting scalability.
    • Once miners confirm transactions, they are added permanently to the blockchain and considered irreversible.
    • Miners prioritize transactions in the MemPool based on fees, giving preference to those with higher incentives.

    Miners' Actions and Fees

    • After confirming a block, miners broadcast it to the network, enabling other nodes to update their ledgers.
    • Higher fees are preferred by miners as they represent greater rewards for processing transactions, influencing their selection.

    Consensus Mechanisms

    • Nakamoto consensus is the mechanism that underpins Bitcoin's security and agreement in transaction validation.
    • Proof of Work (PoW) is known for being slow and costly, particularly due to high energy consumption.
    • Centralized and gamable mechanisms allow manipulation by few entities, contrasting with decentralized models.
    • Proof of Stake (PoS) minimizes hardware costs and is an evolving mechanism aimed at improving upon PoW.

    Bitcoin's Historical Events

    • The Bitcoin network faced incompatibilities due to a divided use of BDB and LDB after a software update.
    • A blockchain fork occurred when nodes adopted different protocols, leading to a split in the network.
    • The term "network split" describes the scenario where parts of the Bitcoin network operated on distinct protocols.
    • Block 74638 holds significance as a landmark event in Bitcoin's history, marking a key point during the network’s evolution.

    Security Threats and Challenges

    • Distributed systems are susceptible to potential security threats such as Sybil attacks, where malicious entities create multiple identities.
    • The main challenge for distributed systems is achieving consensus among numerous nodes without compromising security.

    Mining Behavior and Miners' Choices

    • Miners aim to include as many transactions as possible in a block to maximize fees and optimize block efficiency.
    • In the given scenario, Bob and Joe are the first two miners to successfully mine the transaction pool.
    • Miners choose transactions that are valid and pay fees to ensure profitability and uphold network integrity.

    Proof of Work Protocol

    • The PoW protocol requires miners to solve complex mathematical problems to validate transactions and create new blocks.
    • In the case where both Bob’s and Joe’s blocks are valid, a consensus mechanism decides which block is added to the blockchain.
    • If both blocks are validated, the chain may adopt a technique to handle parallel blocks, ensuring continuity and integrity in the ledger.

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    Description

    Learn about Bitcoin mining process and how transactions are included in a block. Understand why miners aim to include as many transactions as possible in a block.

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