Understanding Bitcoin: Protocols, Practices, and Debates

Abstract

In this reading seminar (Lesegruppe), students will explore how Bitcoin works as a peer-to-peer electronic cash system and investigate selected protocol features, proposed changes, and wallet designs in depth. Through presentations, group discussions, and a short report, students will deepen their understanding and practice communicating technical ideas.

Context

• Seminar

Supervision

• Roman Bögli
• Jonas Spieler

Motivation

Bitcoin [1], a peer-to-peer electronic cash system, is one of the most popular decentralized software systems. It serves as an interesting use case for examining the interplay between cryptography, networking, communication protocols, software engineering, and economics. By exploring selected aspects in depth, students can understand how Bitcoin works and critically discuss its design choices and open challenges. The seminar also develops skills in giving clear technical presentations, asking informed questions, and writing academically.

Goal

Students explore selected Bitcoin features, practices, and debates to understand their underlying mechanisms and trade-offs.

Possible aspects to explore:

• Transaction types and spending conditions: From legacy over SegWit to Taproot transactions and their differences [2].
• Advanced transaction protocols: Multisignature [2], Coinjoin [3], silent payments, or BitVM [4].
• Block-size and data debates: Scaling trade-offs [5] and proposals such as BIP100 and BIP110 [6].
• Temporary forks and reorganizations: Competing blocks, propagation delays, stale blocks, and how the network converges on a shared chain [7].
• Chain and network attacks: 51% attacks, selfish mining [8], and eclipse attacks [9], including their prerequisites, consequences, and possible defenses [10].
• Cold-storage practices: Hardware-wallet security [11], the recent Coldcard attack [12], seed phrase recovery, passphrases, steel backups, and storage across multiple locations.
• Lightning: Payment channels, routing, liquidity, and security assumptions [13, 14].

Following an introductory session on Bitcoin fundamentals, students contribute through the following activities and deliverables:

1. Investigate an aspect: Study relevant literature and technical specifications to explain the selected aspect, assess its trade-offs, and identify open questions.
2. Present the findings: Attend approximately four mandatory in-person meetings during the semester, where students take turns giving a presentation on their investigated aspect, followed by discussion. Students practice structuring a focused talk, designing clear slides, using illustrative examples, and explaining technical ideas clearly.
3. Prepare for discussion: For each presentation, every non-presenting student prepares one informed discussion question by exploring the aspect beforehand. Questions should address its mechanisms, assumptions, or trade-offs and encourage engagement beyond each student’s own investigation.
4. Write a report: At the end of the semester, submit a short report written in LaTeX (4 pages in LNCS format, excluding references), summarizing the investigated aspect and research findings. The report provides practice in concise academic writing, referencing sources, and presenting technical material succinctly.

Requirements

Suitable for students in the later stages of their Bachelor’s studies and beyond. Students should have an interest in decentralized systems, a good command of English, and a willingness to study technical material independently and participate actively in discussions. Prior Bitcoin expertise is not required.

Pointers

• [1] S. Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” 2008.
• [2] A. M. Antonopoulos and D. A. Harding, Mastering Bitcoin: Programming the Open Blockchain, 3rd ed. O’Reilly Media, 2023.
• [3] G. Maxwell, “CoinJoin: Bitcoin privacy for the real world,” Bitcoin Forum, Aug. 22, 2013.
• [4] R. Linus, “BitVM: Compute Anything on Bitcoin,” Dec. 12, 2023.
• [5] K. Croman et al., “On Scaling Decentralized Blockchains (A Position Paper),” in Financial Cryptography and Data Security: FC 2016 International Workshops, 2016, pp. 106–125, doi: 10.1007/978-3-662-53357-4_8.
• [6] J. Lopp, “A Layman’s Guide to BIP-110,” Cypherpunk Cogitations, Feb. 23, 2026.
• [7] C. Decker and R. Wattenhofer, “Information Propagation in the Bitcoin Network,” in Proc. IEEE 13th International Conference on Peer-to-Peer Computing (P2P), 2013, pp. 1–10, doi: 10.1109/P2P.2013.6688704.
• [8] I. Eyal and E. G. Sirer, “Majority Is Not Enough: Bitcoin Mining Is Vulnerable,” in Financial Cryptography and Data Security, 2014, pp. 436–454, doi: 10.1007/978-3-662-45472-5_28.
• [9] E. Heilman, A. Kendler, A. Zohar, and S. Goldberg, “Eclipse Attacks on Bitcoin’s Peer-to-Peer Network,” in Proc. 24th USENIX Security Symposium, 2015, pp. 129–144.
• [10] M. Conti et al., “A Survey on Security and Privacy Issues of Bitcoin,” IEEE Communications Surveys & Tutorials, vol. 20, no. 4, pp. 3416–3452, 2018, doi: 10.1109/COMST.2018.2842460.
• [11] S. Houy, P. Schmid, and A. Bartel, “Security Aspects of Cryptocurrency Wallets - A Systematic Literature Review,” ACM Computing Surveys, vol. 56, no. 1, pp. 4:1–4:31, 2024, doi: 10.1145/3596906.
• [12] K. Loaec, “Critical Coldcard flaw: what happened, who is affected, and what to do,” Wizardsardine, Aug. 1, 2026.
• [13] J. Poon and T. Dryja, “The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments,” draft version 0.5.9.2, Jan. 14, 2016.
• [14] A. M. Antonopoulos, O. Osuntokun, and R. Pickhardt, Mastering the Lightning Network, 1st ed. O’Reilly Media, 2021.