Understanding Bitcoin and PayPal

The video tutorial explains the differences between centralized electronic money transfer systems like PayPal and decentralized systems like Bitcoin. It highlights how PayPal maintains a single ledger, while Bitcoin's ledger is distributed across all network participants. The role of miners in the Bitcoin network is discussed, detailing how they validate transactions, create blocks, and add them to the blockchain. Miners are rewarded for their work through a unique transaction that creates new Bitcoins, a process known as mining, likened to extracting gold.

What has traditionally been the only way to send money electronically?

• Using cryptocurrency

• Sending cash through mail

• Relying on a centralized intermediary

• Using a decentralized network

What does PayPal do to manage transactions?

• It uses a decentralized ledger

• It does not keep any records

• It allows users to send more money than they have

• It keeps track of the amount of money in each account

How is the ledger maintained in the Bitcoin network?

• By the government

• By every participant in the network

• By a centralized server

• By a single company

When was the Bitcoin network first created?

• 2005

• 2009

• 2012

• 2015

What role do miners play in the Bitcoin network?

• They provide customer support

• They manage user passwords

• They listen for transaction messages and bundle them into blocks

• They create new accounts

What is a blockchain?

• A centralized ledger

• A chain of blocks mathematically linked together

• A single block of data

• A type of cryptocurrency

How are miners rewarded in the Bitcoin network?

• By charging users a monthly fee

• By selling user data

• By creating new Bitcoins out of thin air

• By receiving transaction fees only

What is the special transaction that a miner can include in the ledger?

• A transaction that has multiple inputs

• A transaction that is not signed

• A transaction that has no inputs

• A transaction that is invalid

What is the term used for the activity of getting new Bitcoins by providing a public good on the network?

• Staking

• Trading

• Mining

• Investing

What analogy is used to describe the process of mining Bitcoins?

• Planting a tree

• Digging into the side of a mountain and getting gold

• Building a house

• Fishing in the ocean