Explaining how Bitcoin works

For my first post in this Research & Reviews area, I’ll spend a little time explaining the methods I’m using to critique graphical overviews and other media being used to explain a topic. Today’s topic is Bitcoin. I’m not even close to being an expert on it but I find cryptocurrency to be incredibly fascinating. Nevertheless, applying principles of learning theory does not require one to be an expert on the subject matter – I’m merely finding ways to make a complex topic more accessible for novices through various techniques.


For today’s topic (and most that I’ll cover in this blog) I’m assuming the audience has limited or no knowledge of the topic. Most evidence-based guidelines, from multi-media learning and cognitive load theory especially, are applicable to novice learners in particular. Only in rare cases will I focus on high prior knowledge learners (advanced in a given subject) and comment on how they could be better supported. In order to avoid personal style and bias while evaluating content, I’ll reference guidelines or principles that are frequently cited in the field of instructional design.

Now, let’s get started with how Bitcoin works!

First, take a look at the following image gallery. These graphical overviews are different from each other in various ways but attempt to do the same thing – explain what Bitcoin is and/or how it works. Each design has its own merits and faults, which we are going to examine one by one below. Take a look at them on your own first.

So, what did you think? Let’s look at these individually and see how successful these attempts were.

The “Treasure Map” Graphic:

via bitcoin.org

This first attempt is clearly trying to show how one device sends 1.20 bitcoin to another device. See the context for this image here.

Pros – Simplicity. Any attempt that uses images instead of words provides an immediate benefit to the learner. Icons and images help reduce extraneous cognitive load by reducing split attention.* Also, the context for this image includes an analogy to something familiar to many people – email. (Although, email doesn’t bounce around different people’s computers to get “confirmed”, but more on the cons later.)

Cons – Imagine if that arrow and bitcoin amount were not there? This graphic becomes a mess very quickly. It could represent anything that gets transmitted between two devices and bounces around different nodes on the internet, perhaps like folding @ home. In context, there is an explanation of a very crucial aspect of Bitcoin called the blockchain. But this image doesn’t attempt to include this major part of how Bitcoin works. Since we are not even close to the magic number 7 +/- 2* (I push the number of novel elements to 10 at most), we could safely add the notion of a “blockchain” to it, rather than a dotted line that goes to various computers. More than half the image is spent on confirming the transaction alone!


The “Short ‘n Sweet” Graphic:

via fspinvest.co.za
via fspinvest.co.za

This overview attempts to improve the previous one by adding some context next to the image. The article it comes from is poorly written, without paragraphs, and very slangy. (See step 2 above for a taste…)

Pros – There is a title on this image which provides more context than before. The red numbers do stand out and focus attention on the steps. The bold wording is an attempt to highlight what is important in each step, although “everything is cool” doesn’t quite do the confirmation process justice.

Cons – Aside from the wording, which is a poor stylistic choice for adult readers, this image ignores the classic contiguity principle. Although there are only 3 steps here, the listing of steps on the side with numbers on the image increases cognitive load and burdens the reader. Short, concise descriptions next to each step or part of the graphic would be a better alternative.
The same cons from the previous image remain.


The “Poster-Sized” Graphic:

via IEEE.org
via IEEE.org

This attempt is the near opposite of the first two images. Would you use it as part of a brief overview, a lesson, or an entire course? (I’m leaning towards one or two courses.) Let’s see what parts of it work and don’t work for instructional purposes.

Pros – The title clearly stands out from the rest of the image and other colors help separate ideas from each other; however, they don’t seem to identify any relationship among the steps or parts. There is a nice collection of images used throughout this poster with some good captions. Here are a couple good examples:

  1. Bitcoin CylindersThe poster uses cylinders of bitcoin to represent an “address” with different balances of bitcoin.
  2. Transaction BlockThe image that represents the “transaction blocks” that miners use to “bundle” individual transactions is consistent with previous uses of the transaction image. Color is used well here too since Bob and Alice’s transaction (in orange) is getting bundled with the others.

Cons – The poster image is exactly that – a poster! Way too many items and novel concepts are getting crammed into one image. It most definitely contains valuable information with plenty of detail, but this is not where that detail needs to be placed in order for the novice learner to understand how a Bitcoin transaction works. There are at least 15 novel concepts in this image, including the very technical “Cryptographic Hash function” section with its core elements.

If we were building this graphical overview for novices learning about a Bitcoin transaction, this entire section would get reduced. Since there are lower level concepts that should be learned first, introducing a nonce at this point is likely to be a bit overwhelming. Just moments ago the learner was introduced to bitcoin wallets, addresses, private/public key pairs, miners, transaction blocks, etc.! Understanding how Bob and Alice transact in Bitcoin, on the surface, would be much more accessible by not illustrating “Hash value + nonce, Hash value + nonce… starting with a certain  number of zeros” and that “a coinbase transaction pays out 50 bitcoins to the winning miner.”


The “Lost-in-the-Forest” Graphic:

via bitcoinsnitch.com
via bitcoinsnitch.com

In this attempt, the author provides this “handy guide” along side an article that doesn’t particularly reference the image. Let’s see how close to the instructional mark this person gets with this guide.

Pros – Each small image is labelled if it is not obvious enough. The limited amount of text leads to less cognitive load, although there are concepts in this image that are still quite vague. Is the sender using a different blockchain from the receiver?

Cons – Arrows can be a dangerous thing and this image proves it! All of the arrows seem to go to somewhere and not from anywhere. Are all parties involved getting something at the same time? Is nothing leaving any party? The use of arrows should be carefully considered, much like how they are used in a flow chart.

When put into context within the original article, which looks more like filler than anything, there is no linear description at all. This image is more likely to confuse a Bitcoin novice than to clear up any confusion they may have.


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