Bitcoin Basics

What is the primary purpose of Bitcoin mining?

• To paint houses

• To secure and verify transactions on the Bitcoin network

• To walk dogs

• To bake cookies

Explain the concept of blockchain technology in relation to Bitcoin.

• Blockchain technology is a decentralized, distributed ledger system that records transactions across a network of computers. In the case of Bitcoin, blockchain is used to store all transactions made with the cryptocurrency. Each block in the chain contains a list of transactions, and once a block is added, it is linked to the previous block, creating a chain of blocks. This ensures transparency, security, and immutability of the transaction history.

• Each block in the blockchain can be easily modified or deleted.

• Bitcoin transactions are stored in a traditional database system.

• Blockchain technology is a centralized system controlled by a single entity.

Name two types of cryptocurrency wallets commonly used for storing Bitcoin.

• hardware wallets, software wallets

• mobile wallets

• exchange wallets

• paper wallets

How are Bitcoin transactions verified on the blockchain?

• Using physical mail for verification

• Through social media verification

• Through the process of mining and adding verified transactions to new blocks on the blockchain.

• By sending emails to users

What are some recent trends in the Bitcoin market?

• Increased institutional adoption, growing interest from retail investors, regulatory developments, rise of DeFi platforms

• Decrease in market volatility, decline in trading volume, lack of interest from institutional investors

How do regulations impact the use and trading of Bitcoin?

• Regulations can impact the use and trading of Bitcoin by introducing restrictions, licensing requirements, taxation rules, and compliance measures.

• Regulations always promote the use of Bitcoin

• Regulations have no impact on Bitcoin

• Regulations make Bitcoin completely anonymous

What hardware is typically used for Bitcoin mining?

• GPU miners

• ASIC miners

• FPGA miners

• CPU miners

What role do miners play in the Bitcoin network?

• Miners create new Bitcoins through a centralized process

• Miners validate transactions, add them to the blockchain, and secure the network through proof of work.

• Miners are responsible for regulating the value of Bitcoin

• Miners have no impact on the Bitcoin network

What is the difference between a hot wallet and a cold wallet?

• Hot wallets are offline and used for infrequent transactions, while cold wallets are online and used for frequent transactions.

• Hot wallets are online and used for frequent transactions, while cold wallets are offline and used for long-term storage.

• Hot wallets are used for cold storage, while cold wallets are used for hot storage.

• Hot wallets are more secure than cold wallets due to their online nature.

Describe the process of adding a new block to the Bitcoin blockchain.

• The new block is randomly selected from a pool of submitted blocks

• A central authority decides which block to add based on transaction fees

• Miners vote on which block to add, and the majority decision is final

• Miners compete to solve a mathematical problem, the first one to solve it broadcasts the solution, others verify it, and if correct, the new block is added to the blockchain.