Jack, a young entrepreneur in Chicago, wants to open a payment channel with Birdie, who runs a social media app, to pay for services and possibly tip content creators. Jack owns a single UTXO for 0.01 BTC and would like to fund the channel with 200,000 sat (recall 1 BTC= 108108 sat).

a) Describe the characteristics of the channels funding transaction, including inputs/outputs/amounts/content of locking scripts. Assume the blockchain fee is currently 30,000 sat. (10 marks)

b) Briefly list the essential security measures to ensure that Jack and Birdie are both protected from fraud and unfair losses as partners in the payment channel. Include one example of the type of risk that that it protects against. (10 marks)

c) David is an active blogger based in El Salvador who writes on the best DeFi investment opportunities. David and Jack are not financially connected, but David and Birdie have an active payment channel. Currently, that channels balance is {David=10,000 sat, Birdie=40,000 sat}.

List succinctly the necessary steps to route a tip from Jack to David. What is the maximum routable tip in this example (without opening new channels)? (10 marks)

Answers should be theoretical that correspond to the fundamental knowledge of blockchain