Web3 Talents: Fundamentals of Bitcoin, and Ethereum (public blockchain systems) - Discovery & Define Stage.

Katarzyna Hasnik
Apr 28
5 min read

Updated: 6 days ago

1. My timeline of blockchain development

Web3 Talents: Fundamentals of Bitcoin, and Ethereum (public blockchain systems) - Discovery & Define Stage.

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2. My understanding of consensus mechanisms

Evolution of Consensus Mechanisms

1. Proof of Work (PoW)

Introduced by: Bitcoin (2009)

How it works: Miners solve cryptographic puzzles to add blocks and receive rewards.

Strengths: High security and proven track record. Truly decentralized and trustless.

Weaknesses: Very energy-intensive. Slower transaction throughput. High hardware requirements.

2. Proof of Stake (PoS)

Popularized by: Ethereum 2.0 (2022)

How it works: Validators are chosen based on the amount of cryptocurrency they "stake."

Strengths: Energy-efficient. Faster finality. Lower entry barrier than PoW.

Weaknesses: Wealth concentration risks ("rich get richer"). Slashing risks (funds can be lost for bad behavior).

3. Delegated Proof of Stake (DPoS)

Introduced by: BitShares, EOS

How it works: Token holders vote for a small number of delegates who validate transactions.

Strengths: High throughput. Governance via voting.

Weaknesses: Lower decentralization. Risk of collusion among delegates.

4. Proof of Authority (PoA)

Used by: VeChain, some private chains

How it works: Pre-approved validators (often known identities) are responsible for consensus.

Strengths: Fast and efficient. Good for private/enterprise networks.

Weaknesses: Centralized trust model. Not censorship-resistant.

5. Hybrid PoW/PoS or Other Innovations

Examples: Decred (PoW + PoS), Avalanche (Snowball protocol), Tendermint (used in Cosmos)

Strengths: Balance between decentralization, scalability, and speed.

Weaknesses: Complexity. Varying levels of adoption and testing.

3. My comparison of Ethereum and Bitcoin

Summary

PoW: Best for security and decentralization, but not scalable or eco-friendly.
PoS: A more sustainable and scalable solution gaining wide adoption (e.g., Ethereum).
DPoS/PoA: Trade decentralization for efficiency, suited for enterprise or niche use.
Hybrid/Innovative: Aim to solve the "blockchain trilemma" (security, decentralization, scalability).

Defining Bitcoin

Bitcoin types (alternatives and forks):

Bitcoin Cash (BCH): A fork of Bitcoin created to enable faster transactions by increasing the block size limit.
Bitcoin SV (BSV): A fork of Bitcoin Cash that aims to restore Bitcoin's original protocol and increase scalability.
Bitcoin Gold (BTG): A fork of Bitcoin designed to make mining more accessible by using a different hashing algorithm.
Litecoin (LTC): Often referred to as "silver to Bitcoin's gold," Litecoin is based on Bitcoin's code but with faster transaction speeds and lower fees.

These variants offer different features or improvements over Bitcoin’s original protocol.

Defining Ethereum

Ethereum is a decentralized platform for building and deploying smart contracts and decentralized applications (dApps).
Operates on a blockchain, similar to Bitcoin (BTC), but with programmable transactions.
Ether (ETH) is the native currency, used to power the network and pay transaction fees.
Known for its flexibility, supporting a wide range of applications beyond value transfers.
Popular for decentralized finance (DeFi) and other blockchain-based solutions.

Ethereum alternatives and forks:

Ethereum Classic (ETC): A fork of Ethereum that resulted from a split after a hard decision following the DAO hack, maintaining the original Ethereum code.
Binance Smart Chain (BSC): A blockchain developed by Binance, designed for fast and low-cost transactions, supporting Ethereum-compatible smart contracts.
Polygon (MATIC): A Layer 2 scaling solution for Ethereum, designed to improve transaction speed and reduce costs while maintaining compatibility with the Ethereum network.
Avalanche (AVAX): A blockchain platform focused on high-speed transactions and low fees,
often seen as an alternative to Ethereum for DeFi projects.

These alternatives offer different features such as scalability, transaction speed, or lower fees compared to Ethereum’s original protocol.

3. My first thoughts on blocks & hashes

Blocks: The Digital Ledger Pages

Think of a block as a page in a record book:

It contains data, like: a list of transactions, a timestamp, a reference to the previous block (called the hash of the previous block).
Every block is linked to the one before it, forming a chain of blocks (hence blockchain).
Once written, it’s almost impossible to change without altering every subsequent page, this gives blockchain its immutability.

Example (Simplified Block Content):

Block #5:

- Transactions: A → B, 5 BTC; C → D, 2 BTC

- Timestamp: 2025-05-18

- Previous Block Hash: 0000abc...

- Current Hash: 0000def...

Hashes: The Glue That Holds Blocks Together

A hash is like a digital fingerprint for a block:

It’s created by running the block’s data through a hash function (e.g., SHA-256).

The hash is:

Unique: Even a tiny change in data creates a completely different hash.
Fixed length: No matter the input size, the output is always the same length.

The hash of each block depends on:

The contents of the block.
The hash of the previous block.

Why hashes matter:

They link blocks together.
They ensure integrity, if someone tries to tamper with a block, the hash changes, breaking the chain.

First Thought Summary

Concept Think of it as... Role

Block A page in a tamper-proof ledger Stores transactions and links to the past

Hash A fingerprint Ensures data integrity and links blocks

Blockchain = LEGO Bricks + Digital Chains

Blocks = LEGO Bricks

Imagine each block is a LEGO brick:

Each brick contains:
- Transactions (the block's data)
- A timestamp (when it was added)
- A special connector: the hash of the previous brick
Hashes = Connectors That Snap Bricks Together
Each LEGO brick has a code on it (a hash) that’s calculated based on its contents.
That code is written on the next block, so each brick is connected to the previous one.
If you change the data in one brick, its hash changes, and the next brick’s connection breaks, like breaking a LEGO chain.

Visual Diagram (Conceptual)

[ Block #1 ]

| Data: A → B |

| Hash: H1 |

↓

[ Block #2 ]

| Data: C → D |

| Prev Hash: H1 |

| Hash: H2 |

↓

[ Block #3 ]

| Data: E → F |

| Prev Hash: H2 |

| Hash: H3 |

The “Prev Hash” in each block ensures it's chained to the correct previous block.

If someone tries to tamper with Block #2:

Its hash (H2) changes → Block #3’s link breaks.
You’d have to recalculate every block after, which is computationally infeasible in secure blockchains.