[JOURNAL] (Movish) GB : 01-07

[movish01]

Name: Movish Verma
Book/article to discuss - Grokking Bitcoin: 01-07

Questions:

1. How typing errors are prevented in Bitcoin addresses?

Soln. We use base58check to prevent typing errors, the public key hash is first encoded by base58check to get the Bitcoin address. Then that address is decoded using base58check decoding, it confirms that no typing errors occurred and converts the address into PKH.

2. If I share my address with someone, he/she would know where do I spent my cryptocurrency previously, isn’t it a concern for privacy?

Soln. The same is the reason why address reuse is discouraged, as some may know what we are spending and how much, so we should use different addresses for different transactions.

3. What are Hierarchical deterministic wallets?

Soln. Hierarchical deterministic wallets create new key pair from the master key pair for each transaction to enhance privacy and security creating a tree where the master key determines the key pair that follows it in the hierarchy. The user can use the tree structure to organize transactions by type of transaction or by an entity involved, such as departments or subsidiaries.

4. “If Rita accidentally writes the last word as a deposit instead of depend, the checksum check will probably fail”, why will checksum "probably" fail? (Section - 4.5.3, Grokking Bitcoin)

5. How do wallets like Metamask store out the private key and how safe are they?

Soln. Metamask stores the private key, secret recovery phase in an encrypted format locally on the device where it is installed.

6. There is a bug in Bitcoin software that causes OP_CHECKMULTISIG to need an extra dummy item first in the signature script. Is it fixed?

7. What is the limit of transactions a block can hold?

Soln. The on-chain transaction processing capacity of the bitcoin network is limited by the average block creation time of 10 minutes and the original block size limit of 1 megabyte. The transaction processing capacity maximum estimated using an average or median transaction size is between 3.3 and 7 transactions per second.

8. How to trust a branch of blockchain?

Soln. The branch of blockchain with the most accumulated proof of work is considered the best branch to follow.