Bitcoin 3

Question 1

what’s an ICO

Answer 1

initial coin offering:

-new projects, startups, and companies sell their underlying crypto tokens in exchange for investor money

Question 2

what’s a difference between ICO and IPO

Answer 2

• owning a new token does not mean you own a piece of the company
• it just enables you to use the new project when it becomes available and incentivizes others by signaling that the project will probably be widely used
• IPOs require you to be qualified by the SEC before you can take part (more than 5 million in net worth?); anyone can get in on an ICO

Question 3

what’s a crypto hash function

Answer 3

it operates like a fingerprint; a one-way function that takes some input and produces a pseudorandom output

Question 4

what is the crypto hash function’s output called

Answer 4

the image

Question 5

what is the crypto hash function’s input called

Answer 5

the pre-image

Question 6

what are the properties of a crypto hash function

Answer 6

1) pre-image and second pre-image resistance

2) collision resistance

Question 7

what does pre-image mean

Answer 7

input

Question 8

what does resistance mean

Answer 8

difficulty

Question 9

what does pre-image resistance mean

Answer 9

difficulty of finding an input given some output; given some hash function H and some output of the function H of x, it is computationally difficult to find x, i.e. you can’t easiy figure out the input that created the output

Question 10

what’s the point of pre-image resistance

Answer 10

to make sure that no one can reverse engineer your “fingerprint”

Question 11

what’s the point of second pre-image resistance

Answer 11

it helps prevent anyone from stealing your fingerprint; keeps anyone from generating your fingerprint with a different input; given some hash function H and some output H of x, it is computationally difficult to find a different input x such that H of x equals H of x

Question 12

what is collision resistance

Answer 12

it’s something that prevents two arbitrary inputs from mapping to the same output; given some hash function H, it is computationally difficult to find two different inputs x and y such that H of x equals H of y

Question 13

what’s the avalanche effect

Answer 13

when any change in an input results in a pseudorandome change in output; prevents the ability to guess the output based on the inputs

Question 14

what hash function does Bitcoin use in many scenarios

Answer 14

SHA-256. designed by NSA. stands for secure hash algorithm producing a 256-bit output; usually Bitcoin uses this hash once on the original message you want to hash and a second time on the the output of the first hash

Question 15

what are the components of a blockchain

Answer 15

• block header: the metadata necessary to understand the components of the block
• block size: tells how large the block is
• transaction counter: how many transactions are in the block
• transactions: the actual transaction data

Question 16

what are the the components of a block header

Answer 16

The block header is simply the hash of all of the following fields combined into a chain:

• prev block hash: represents the chaining
• merkle root: summary of transactions
• nonce: represents the proof-of-work
• timestamp
• target
• version

Question 17

what is the merkle root

Answer 17

the top of a merkle tree, which is a cryptographic data structure

Question 18

what is a tree in computer science

Answer 18

a data structure that has some root node and some children, which may also be the roots of other trees

Question 19

what’s a binary tree

Answer 19

a data structure in which every node has two children

Question 20

what’s a merkle tree

Answer 20

a very specific version of a binary tree in which there is a power of two children on the bottom-most level and the lowest level is made of the hashes of the information that you would like to summarize