Assignment 2: Bitcoin and Blockchain

Question 1: What is a bitcoin?

Bitcoin is a digital currency, and the mysterious and pseudonymous Satoshi Nakamoto founded it in January 2009 following the housing market crash. The person who created bitcoin technology remains a mystery up to date (Antonopoulos, 2014). A decentralized authority operates Bitcoin, and its transaction fee is lower than those of other online payment methods. Bitcoins are virtual balances kept on a public ledger that every person can transparently access. Bitcoins are neither issued nor controlled by any financial institution and cannot be valued as a product. The popularity of bitcoin has triggered the launch of several other virtual currencies.

Question 2: how does blockchain work?

A Blockchain is a system that enables several interconnected computers to maintain a common safe ledger. To execute transactions on the blockchain, one must have an e-wallet, a system that enables someone to store and exchange one bitcoin. Individuals should only spend their bitcoin, and the wallets are protected by private and public keys that are distinct but connected.  Transactions in blockchain occur within a peer-to-peer world network, and thus bitcoin becomes a decentralized digital currency with no borders (Grinberg, 2011).

Blockchain systems...