Task

Analyse the purpose structure, and design of base layer $1$ of the Bitcoin network, which provides the security layer.

Description

Explore the fundamentals concepts of the Bitcoin layer $1$ network and its integration with public$-$key cryptography. Demonstrate their knowledge by analysing real$-$world scenarios and proposing solutions.

Case Study

Scenario: You have been hired as a Bitcoin consultant, and your task is to assess the strengths, weaknesses, and security implications of utilising the Bitcoin layer $1$ network in conjunction with public$-$key cryptography for a financial institution. Your assessment should provide the institution with a deep understanding of the technology$$s complexities, allowing them to make informed decisions regarding the integration of Bitcoin transactions into their operations.$$

Task: provide a report that discussed the following items:

Provide an overview of the Bitcoin Layer $1$ network, including its structure, consensus mechanism, and transaction processing.

Explain the principles and mechanisms of public$-$key cryptography and its role in securing Bitcoin transactions.

Analyse the strengths and weaknesses of the Bitcoin layer $1$ network, considering factors such as scalability and transaction throughput.$$

Evaluate the impact of public$-$key cryptography on the security and privacy of Bitcoin transactions, addressing topics such as transaction verification, non$-$repudiation, and pseudonymity.$$

Discuss the potential risks and challenges associated with the adoption of public$-$key cryptography and the Bitcoin layer $1$ network, such as key management, quantum computing threats, and regulatory concerns.$$

Present a recommendation to the financial institution, outlining the benefits, risks, and potential mitigations related to the integration related to the integration of Bitcoin layer $1$ network and public$-$key cryptography into their operations.$$