Bitcoin & Blockchain – FIN451
Concepts, incentives, operations, and business fit (non-developer, FinTech-level).
1. Bitcoin in 90 seconds
2. Blocks & Proof of Work
3. Fees & mempool
4. Incentives & halving
5. Risks
6. Keys & custody
7. Interactive tools
8. Watch & learn
9. Enterprise blockchain
10. Business cases
11. When not to use
12. Quiz
1) Bitcoin in 90 seconds
What it is
- A public ledger (blockchain) anyone can verify.
- Native asset: BTC.
- Target block time ≈ 10 minutes.
Why it works
- Proof of Work (PoW) requires costly computation.
- Rewriting history needs more work than the honest network.
2) Blocks, Hashes & Proof of Work
Hashing
A hash is a short fingerprint of data. Change input by 1 bit → totally different hash.
one-waycollision-resistantfast to verify
Block structure (intuition)
- Header: prev hash, time, target, nonce.
- Body: valid transactions.
Goal: find nonce so hash(header) < target.
3) Fees, Mempool & Priority
Mempool
Unconfirmed transactions wait in a public queue (mempool). Miners pick.
How priority works
Users bid fee rate (sat/vB). Higher fee rate ≈ faster confirm.
4) Incentives, Halving & Security
Miner revenue
- Block subsidy (post-2024): 3.125 BTC.
- Plus transaction fees.
Why attacks are hard
- Need enormous hash power and capital.
- Honest chain keeps advancing.
5) Operational, Market & Policy Risks
Operational
- Key loss/theft; no reset.
- Fee spikes & delays.
- Signing mistakes.
Market / Balance-sheet
- Volatility vs. liabilities.
- Accounting & audit trails.
6) Keys, Wallets & Custody
Keys & addresses
- Private key: spending authority.
- Public key / address: receiving.
seed phrasehardware walletmultisig
Custody models
- Self-custody, qualified custodians, shared control.
7) Interactive Learning Tools
8) Watch & Learn
Understanding bitcoin
Crypto cannot be cash
Understanding Bitcoin Mining
Managing Crypto Wallet Security
9) Enterprise Blockchain (Permissioned)
What changes vs. Bitcoin
- Known participants; permissioned access.
- Energy-light consensus (RAFT/PBFT).
- Selective sharing (channels/private data).
Why firms try it
- Traceability & recalls.
- Shared, auditable logs.
- Digitized docs & conditional release.
10) Business Cases That Help
Food & Pharma Traceability
- Origin, lot, temp logs, handoffs.
- Faster/narrower recalls.
Trade & Supply-Chain Finance
- Bills of lading, invoices, inspection certs.
- Auto-release on milestone proofs.
Anti-counterfeit & Provenance
- Register serials; detect duplicates.
11) When Blockchain is the Wrong Tool
- Single-firm database; no cross-company trust issue.
- APIs with signatures are sufficient.
- High-change data needing edits/deletes.
12) Quiz – Check Your Understanding
- What is the block time target for Bitcoin?
- Why is Proof of Work considered secure?
- What is the purpose of the difficulty adjustment?
- Define “mempool.”
- What happens to miner revenue after a halving?
- Give one advantage and one disadvantage of public blockchains.
- Why is “garbage in → garbage out” a risk in enterprise blockchain?
- What does “self-custody” mean?
- Give an example of a real-world blockchain use case in supply chain.
- Why might a traditional database be better than a blockchain for some cases?
Answers
- ~10 minutes.
- Costly to produce, easy to verify; attacker must outwork the honest chain.
- Keep average block time ≈ 10 minutes as hash rate changes.
- Mempool: node’s queue of unconfirmed transactions.
- Subsidy halves, so revenue mix shifts to fees + smaller subsidy.
- Advantage: open/neutral/verify. Disadvantage: limited throughput/variable fees.
- Bad input is immutable; blockchain can’t fix off-chain data quality.
- You control the private keys (and security/backups).
- Example: food/pharma traceability for faster, narrower recalls.
- When one org controls data and needs edits/deletes + low latency → use a DB.