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Bitcoin: 45 questions and answers

The questions from the Bitcoin course, each with the correct answer and a short explanation. Learn the topic step by step in the Unicorn Academy app.

1. The problem of digital money

What is double spending?

The possibility of spending the same digital coin twice A file is easy to copy: without a shared ledger the same coin could be spent twice.

How do traditional electronic payments solve the problem?

With a trusted intermediary that keeps the ledger of balances The bank records balances and approves every movement.

What solution does bitcoin propose?

A public ledger kept by many independent computers Consensus among many participants replaces the intermediary.

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2. The birth of bitcoin

When was the paper describing bitcoin published?

On 31 October 2008 The genesis block came two months later, on 3 January 2009.

Who issues bitcoin?

No state or company: the rules are in the network's software Issuance follows automatic rules shared by the participants.

How do bitcoin's rules change?

Only if most participants adopt the new version of the software The software is open source and changes require broad adoption.

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3. The blockchain

What does each block contain besides transactions?

A cryptographic fingerprint of the previous block This is the link that turns blocks into a chain.

Why is it hard to change an old transaction?

Because it would change the fingerprint of that block and all following ones Altering the past would require redoing the whole subsequent chain.

What does a full node do?

It keeps a copy of the ledger and checks the rules on its own Each node checks independently, without relying on an authority.

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4. Mining and proof of work

What does the miner who finds a block receive?

A reward in bitcoin The reward pays for the cost of electricity and machines.

Why does proof of work protect the network?

Because rewriting history would require more computing power than the rest of the network The cost of computation makes an attack economically prohibitive.

How often is a block found on average?

About every ten minutes The difficulty adjusts to keep this average pace.

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5. Limited supply and halving

What is the maximum number of bitcoins that can exist?

21 million The limit is written into the protocol's rules.

What happens with the halving?

The reward per block is halved It happens every 210,000 blocks; with the April 2024 halving the reward fell to 3.125 bitcoins.

Does limited supply guarantee that bitcoin has value?

No, the price depends on demand Scarcity alone is not enough: someone must be willing to buy.

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6. Keys and addresses

What does owning bitcoin mean?

Controlling a private key Funds move only with the signature of the private key.

What can you give to someone who needs to pay you?

The address The address can be shared; the private key and recovery phrase never.

What happens if you lose the recovery phrase with no other copies?

You lose the funds for ever There is no central authority able to restore access.

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7. Custodial and non-custodial wallets

Who holds the keys in a custodial wallet?

Another company, for example an exchange The user sees a balance, but the keys belong to the company.

What is the main risk of a non-custodial wallet?

That a user mistake leads to the loss of the funds Control is total, and so is responsibility.

What does someone using a custodial wallet depend on?

The soundness and honesty of the custodian company If the company fails or makes mistakes, the funds may be at risk.

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8. Transactions and fees

Why do fees rise when the network is congested?

Because block space is limited and miners pick the highest fees There is competition for scarce space.

What is a confirmation?

The inclusion of the transaction in a block, plus each later block More confirmations make the transaction harder to overturn.

Can a confirmed transaction be reversed?

No There is no chargeback: a mistaken payment is usually final.

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9. Exchanges and buying

What is an exchange?

A platform that trades bitcoin for currencies such as the dollar and the euro The price is formed by supply and demand.

Why do exchanges ask you to verify your identity?

Because of anti-money-laundering rules It is a legal obligation for regulated platforms.

What is worth checking before using an exchange?

That the platform is authorised where you live Authorisation is the first protection, even if it does not remove every risk.

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10. The Lightning Network

Why was the Lightning Network created?

For small, frequent, fast and cheap payments The main network handles few transactions per second.

What goes on the blockchain in a Lightning channel?

Only the opening and closing of the channel Intermediate payments happen off-chain.

What is a limitation of the Lightning Network?

It is more complex to manage and requires active nodes This is why many people use wallets that hide its complexity.

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11. Why bitcoin has a price

What determines the price of bitcoin?

How much someone is willing to pay for it There is no issuer and no stream of profits behind it.

Why do traditional valuation methods not apply well?

Because bitcoin generates no cash flows Without profits or coupons there is nothing to discount.

Which of these is a reason people buy bitcoin?

To use it as an alternative store of value Motivations differ, but none involves a guaranteed return.

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12. Volatility

How does bitcoin's volatility compare with that of large shares?

It is much higher Bitcoin's history includes several falls of more than 70%.

Which factor contributes to volatility?

The widespread use of leverage on trading platforms Forced liquidations amplify the moves.

What are the simplest defences against volatility?

Investing a small part of your assets and without borrowed money That way a sharp fall does not compromise your finances.

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13. Bitcoin ETFs

When did the SEC approve the first spot bitcoin ETFs?

On 10 January 2024 Since then they can be bought on the stock exchange in the United States.

What practical advantage does a bitcoin ETF offer?

You do not have to manage keys and wallets It is bought through a brokerage account, paying an annual fee.

Does the ETF reduce price risk?

No, if bitcoin falls the ETF falls too Custody changes, not exposure to the price.

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14. Traceability and tax

Why is bitcoin called pseudonymous rather than anonymous?

Because transactions are public and addresses can be linked to people The ledger is transparent; only the name is missing, until someone links it.

How can an address be linked to a person?

For example through an exchange that knows the customer's identity Blockchain analysis companies work precisely on these links.

What is worth doing about tax?

Keeping records and getting advice from an expert In many countries gains must be declared.

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15. Energy consumption

Why does the bitcoin network use a lot of energy?

Because miners compete with computing power in proof of work The network's security rests precisely on this cost.

What is one argument of the supporters?

That some miners use renewable or surplus energy Critics respond by stressing the overall impact.

What practical consequence has the energy issue had?

Some countries have restricted or banned mining Some institutional investors also take it into account.

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