How Transactions, Addresses, and Wallets Work
Free Chainalysis Cryptocurrency Fundamentals Certification practice — 6 questions on How Transactions, Addresses, and Wallets Work, with explanations. No sign-up. Full 12-question mixed test →
A Bitcoin wallet holds a single UTXO worth 0.5 BTC. The user wants to send 0.3 BTC to a merchant, with a network fee of 0.0001 BTC. Which of the following BEST describes how the transaction must be structured?
UTXOs are indivisible — the entire UTXO must be consumed as an input, and any leftover value not sent to the recipient must be returned as a new 'change' output, typically to a fresh address controlled by the sender.
An Ethereum account has an on-chain nonce of 15 (meaning the next valid transaction must use nonce 15). The wallet software broadcasts a new transaction using nonce 16 while no transaction with nonce 15 has yet been submitted or confirmed. What is the MOST likely result?
The account-based model tracks a running nonce per account and requires transactions to be processed in strict sequential order; a transaction with a nonce higher than the next expected value sits pending until the gap is filled.
A crypto exchange wants to secure roughly 95% of customer funds against remote hacking, requiring that rare, batch-signed withdrawals be reviewed and approved by multiple staff members before broadcast. Which storage approach BEST meets these requirements?
Offline, air-gapped cold storage with multisignature approval directly matches the requirement for infrequent, multi-party-reviewed withdrawals and minimizes exposure to remote compromise, which is the standard approach for the bulk of exchange reserves.
Which statement correctly differentiates the UTXO model (e.g., Bitcoin) from the account-based model (e.g., Ethereum)?
This correctly states the core structural difference: UTXO chains consume/create discrete unspent outputs per transaction, while account chains maintain a running balance per address updated sequentially via nonces.
You inspect a Bitcoin transaction on a block explorer and observe: 3 confirmations, 2 inputs totaling 1.2 BTC, 2 outputs of 0.7 BTC and 0.4999 BTC, and a transaction fee of 0.0001 BTC. What can you correctly conclude?
With two inputs totaling 1.2 BTC and two outputs summing to 1.1999 BTC (fee = 0.0001 BTC), one output is almost certainly a change output; 3 confirmations means the transaction has already been included in a block and two additional blocks have been mined on top of it.
A compliance analyst needs to continuously monitor all incoming funds to a set of customer-controlled Bitcoin addresses but must never have the ability to move or spend those funds. Which wallet configuration is BEST suited to this need?
A watch-only wallet imports only public keys or addresses, allowing full visibility into balances and incoming transactions without ever holding the private key needed to spend funds — exactly matching the monitor-only requirement.
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