White enlarges her eye space with 1, then makes eye shape with 3. Incidentally, White 1 - Black 2 makes a notcher with code 411WN.
If White descends instead of move 3, then White is also alive. However this way is less good for White, as Black can profit by capturing some stones. See problem 28 in this series for details.
This is the correct way to punish White: Black 1 strikes at the vital point, and if White 2, the hane kills.
Go to Problem 59
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