Bitcoin Exam

WHITE PAPER

2008 October 31

The pseudonym Satoshi Nakamoto

publishes a White Paper,

explaining how Bitcoin works.

GENESIS BLOCK

2009 January 09

Satoshi launches

the Bitcoin network

2008 October 31

with Block #0.

2010 May 22

PIZZA DAY

Laszlo Hanyecz pays Jercos Sturdivant

10,000 BTC ($41) for two Papa John’s

pizzas, the first Bitcoin purchase.

EARLY MERCHANTS

2012 November 15

WordPress announces

it will start taking

Bitcoin payments.

2016 January 14

LIGHTNING NETWORK

Joseph Poon and Thaddeus Dryja

release the Lightning Network

White Paper.

BCH HARD FORK

2017 August 01

The Bitcoin network “hard forks” into

Bitcoin [Classic] (BTC)

and Bitcoin Cash (BCH)

2021 June 09

EL SALVADOR

The Legislative Assembly of the

Republic of El Salvador adopts Decree

No. 57, making Bitcoin legal tender.

BITCOIN’S PANDEMIC SPIKE

2021 November 10

On the heels of the worldwide

COVID-19 pandemic, Bitcoin’s USD

value spikes to $69,044, plummeting

shortly thereafter.

2022 March 09

PRES. BIDEN’S EO

President Biden signs his “Executive

Order on Ensuring Responsible

Development of Digital Assets.”

SPOT BITCOIN ETF

2023 June 15

BlackRock files

for SEC approval

of a spot Bitcoin ETF.

BLOCKCHAIN

Shared, digital ledger that

contains transaction records,

automated ‘smart’ contracts, or

other information.

SMART CONTRACTS

Programmes on a blockchain

that trigger transactions and

other commands when certain

criteria are fulfilled.

CRYPTOCURRENCY

Digital currency with transactions

recorded by computers solving

cryptographic puzzles, eliminating

the need for overseers.

DAOs

Organizations that use smart

contracts to organize

decentralized governance.

BITCOIN (BTC)

Secure.

Solves the double-spend problem in a ‘trustless’ way.

Uninflatable.

LITECOIN (LTC)

Same as Bitcoin but more efficient, cheaper, and, optionally,

private.

Doesn’t have Bitcoin’s momentum.

MONERO (XMR)

Same as Bitcoin but totally private.

Many ‘Bitcoin maxi’s’ intend to switch to XMR at mass adoption

of BTC.

CARDANO (ADA)

Adopted a ‘proof of stake’ to avoid the expensive, labour-

intensive, and energy-inefficient ‘proof of work’.

Markets itself as the environmentally friendly cryptocurrency.

ETHER (ETH)

Designed to employ ‘smart contracts’.

Recently switched from ‘proof of work’ to ‘proof of stake’.

RIPPLE (XRP)

Designed to replace the SWIFT system that settles the

accounts of large financial institutions and therefore works very

well with the existing infrastructure.

➡Has its own consensus model rather than ‘proof of work’ or

‘proof of stake’.

DOGECOIN

(DOGE)

Started as a joke to make fun of the ‘altcoin’ explosion.

Logo patterned on the Japanese hunting dog, Shiba Inu.

Has suddenly skyrocketed in value several times.

Favoured by Elon Musk, who announced that SpaceX would

fund a mission to the moon with it.

A potential currency for X.

SHIBA INU (SHIB)

Created to be a competitor of DOGE.

A potential currency for the ‘metaverse’.

SMART CONTRACTS

Programmes on a blockchain that trigger transactions and other

commands when certain criteria are fulfilled.

Operate on if/then commands.

Utilise ‘oracles’ (trusted sources) to obtain real-world info inputs.

Most are ethereum network-driven, as it was created to facilitate smart

contracts.

SMART CONTRACTS

USES

A more efficient and fraud-proof way of executing traditional contracts.

A more comprehensive, secure, and private censuses.

Crowdfunding mechanisms that automatically give the fundraiser the

funds once the threshold is reached or automatically return it to the

donors if it isn’t reached by a particular date.

Fully automated charitable distribution.

Fully automated flash loan investments.

DAOs

Organizations that use smart contracts to organize decentralized

governance.

DAOs finance projects, govern communities, and share value.

Authority is distributed amongst stakeholders (as opposed to merely

executives, boardmembers, or shareholders) through tokens based on

participation, contribution, and investment.

P. McCormick’s stages in becoming a DAO:

1. Product-Market Fit

2. Community Participation

3. Sufficient Decentralization

Decentralization

The system structure where control is spread across participants, rather than held by a single authority or government.

Node

A computer that runs Bitcoin software and helps validate transactions on the blockchain.

Full Node

A node that stores the entire Bitcoin blockchain and enforces network rules (“verify, don’t trust”).

Mining Node / Miner

A node that validates transactions and adds them to the blockchain by solving complex mathematical puzzles.

Fiat Currency

Government-issued money not backed by a physical commodity; its value depends on trust in the issuing government.

Sound Money

Money that maintains purchasing power over time; durable, scarce, and difficult to produce (e.g., Bitcoin, historically gold).

21 Million Cap

The fixed supply of Bitcoin that can ever exist; ensures deflationary nature and scarcity.

Satoshis

The smallest divisible unit of Bitcoin (1 bitcoin = 100 million satoshis).

Proof of Work (PoW)

The consensus algorithm that secures Bitcoin by requiring miners to expend computing power to add new blocks.

Mining Reward / Block Reward 

New bitcoins given to miners for successfully adding a block to the blockchain.

Difficulty Adjustment 

protocol that alters mining difficulty every 2,016 blocks (≈ 2 weeks) to keep block times ~10 minutes.

The Halving

The event that cuts the block reward in half every 210,000 blocks (≈ 4 years), reducing Bitcoin’s inflation rate.

51 Percent Attack

theoretical attack where someone controls > 50% of the network’s computing power, allowing double-spending.

Double Spend

The act of using the same bitcoin twice; prevented by blockchain verification.

Private Key

A secret digital key that allows the owner to access and spend their bitcoin.

Public Key / Address

visible identifier used to receive bitcoin; derived from the private key.

Seed Phrase

 12 or 24-word backup of your private key, used to recover wallets.

Hot Wallet

wallet connected to the internet (convenient but less secure).

Cold Wallet / Cold Storage

An offline wallet (more secure; includes hardware wallets).

Hardware Wallet

A physical device (like Ledger or Coldcard) that stores private keys offline.

Self-Custody 

Personally holding your private keys instead of leaving them on an exchange.

Decentralized Finance (DeFi)

Financial services built on blockchain networks without traditional intermediaries.

Bitcoin Cash (BCH)

fork of Bitcoin from 2017 created to allow larger block sizes and faster transactions.

Fork (Hard Fork)

split in a blockchain when participants disagree on protocol changes, creating a new chain.

Lightning Network

Layer 2 solution enabling instant, low-fee bitcoin payments by operating off-chain.

Layer 2 Solution

A system built atop the main blockchain to increase speed and lower transaction costs.

Lyn Alden’s Analogy

Bitcoin energy use ≈ a dishwasher cycle: same total energy per block regardless of transactions inside.