Bitcoin Transactions and Wallets Flashcards

What is the purpose of the 'locktime' field in a Bitcoin transaction?

Answer: Specifies the earliest block height or timestamp at which the transaction can be included

Locktime specifies the earliest block height or Unix timestamp before which the transaction cannot be mined into a block.

In a Bitcoin wallet, what does a BIP39 mnemonic seed phrase represent?

Answer: An entropy value encoded as human-readable words used to derive a hierarchical deterministic wallet

BIP39 encodes entropy as 12–24 human-readable words that serve as the root seed for deriving all keys in an HD wallet.

What happens to the UTXOs used as inputs when a Bitcoin transaction is confirmed?

Answer: They are marked as spent and removed from the UTXO set

Confirmed transaction inputs are consumed and their UTXOs are permanently removed from the UTXO set.

Which script type requires multiple private keys to authorize a transaction?

Answer: P2SH multisig

P2SH multisig (Pay-to-Script-Hash) wraps a redeem script requiring M-of-N signatures to spend funds.

What is 'change' in the context of a Bitcoin transaction?

Answer: Leftover value from a consumed UTXO sent back to the sender

When a UTXO's value exceeds the payment amount, the excess is sent to a change address controlled by the sender.

A Bitcoin wallet described as 'non-custodial' means:

Answer: The user controls their own private keys without relying on a third party

Non-custodial wallets give users direct control of private keys, eliminating reliance on a third party to secure funds.

What role does the 'sequence number' field in a transaction input serve in Replace-By-Fee (RBF)?

Answer: An input with sequence number below 0xFFFFFFFE signals the transaction is replaceable via RBF

BIP125 defines that setting an input's sequence number to 0xFFFFFFFD or lower signals opt-in RBF, allowing fee bumping.