Certified Bitcoin Professional Practice Exam

What type of network is Bitcoin?

1. Centralized

2. Decentralized

3. Distributed

4. Public

The correct answer is: Decentralized

Bitcoin operates on a decentralized network. This means that no single entity or organization controls the Bitcoin network. Instead, it relies on a distributed group of nodes (participants) that validate and record transactions through a consensus mechanism, usually through mining for proof-of-work, which requires participants to solve complex mathematical problems. Decentralization is crucial because it enhances the security and resilience of the network. If one node fails or is compromised, the network as a whole remains unaffected, ensuring the continuity of the Bitcoin system. Each node maintains its own copy of the blockchain, which is the public ledger of all transactions, contributing to the transparency and immutability that Bitcoin is known for. The other options present different characteristics. Centralized networks would imply a single point of control, which contradicts Bitcoin's foundational principle of being open and accessible. A distributed network can refer to various arrangements, but in the context of Bitcoin, the emphasis is specifically on its decentralization. Finally, while Bitcoin is indeed a public network, the primary defining characteristic in this context is its decentralized nature, as it enables participants to transact directly without intermediaries.