Module 2: How Bitcoin Works
In this module, we will learn how Bitcoin works in more detail. We will cover the following topics:
- The Bitcoin protocol
- Bitcoin mining
- Bitcoin transactions
- Bitcoin addresses
- Bitcoin wallets
The Bitcoin protocol
The Bitcoin protocol is the set of rules that govern how Bitcoin works. The protocol is open source, meaning that anyone can view and contribute to it. The protocol is designed to be secure, decentralized, and transparent.
Bitcoin mining
Bitcoin mining is the process of adding new blocks to the blockchain. Miners are rewarded with Bitcoin for their work. Mining is a computationally intensive process, and it requires specialized hardware.
Bitcoin transactions
Bitcoin transactions are recorded on the blockchain. Each transaction includes the sender's address, the recipient's address, and the amount of Bitcoin being sent. Transactions are verified by miners and added to the blockchain.
Bitcoin addresses
Bitcoin addresses are used to send and receive Bitcoin. An address is a 26-character string that is used to identify a Bitcoin wallet.
Bitcoin wallets
Bitcoin wallets are used to store Bitcoin. A wallet is a software application that stores your Bitcoin private keys. Your private keys are used to sign transactions, which authorizes them to be added to the blockchain.
Conclusion
In this module, we learned how Bitcoin works in more detail. We covered the Bitcoin protocol, Bitcoin mining, Bitcoin transactions, Bitcoin addresses, and Bitcoin wallets. We hope that this module has given you a better understanding of how Bitcoin works.
Read before moving on
The bitcoin whitepaper could prove to become the most important paper in recent history. It can be a little complex, but in total its only 8 pages long (with diagrams). It's okay if you don't understand all of it right now, its still worth a look.
Module 2 Quiz
- What is the Bitcoin protocol?
- What is Bitcoin mining?
- What are Bitcoin transactions?
- What are Bitcoin addresses?
- What are Bitcoin wallets?
