Expanding On What Bitcoin Started: Kadena's Chainweb Series (Part 1)

Expanding On What Bitcoin Started: Kadena's Chainweb Series (Part 1)


March 8, 2024

In 2009, an anonymous person or group known as “Satoshi Nakamoto” released Bitcoin, the first blockchain and cryptocurrency. This was revolutionary to traditional finance, as it was the first peer-to-peer digital currency system that operated independently of any central authority such as a bank or government.

Bitcoin is based on blockchain technology, a method of recording the history of transactions that makes transactions virtually impossible to change or manipulate. This technology provides the security and decentralization people have sought in traditional financial systems for decades.

As soon as Kadena’s founders saw Bitcoin and blockchain technology's potential impact on the global financial system, they were inspired to build upon the idea. Of course, before we look at all the ways Bitcoin inspired the creation of Kadena, we must first dive into how blockchain technology works.

How Blockchain Works

A major pillar of blockchain operation is consensus. A consensus mechanism is a set of rules that allow participants in a blockchain all over the world to come to an agreement on which transactions have happened and in what order. This mechanism takes the place of a central institution as the arbiter of economic disputes and serves as the linchpin of the blockchain's ability to represent and track ownership of assets reliably.

Bitcoin is based on the Nakamoto Consensus. The Bitcoin blockchain processes transactions in blocks. Anyone can post their transactions to the P2P network, a globally distributed network of nodes. So-called mining nodes collect and bundle the transactions into blocks.

A block contains multiple transactions (tx)

Miners then have to solve a complex mathematical puzzle for each block. Whoever solves the puzzle first wins the block and receives a reward, a small portion of the underlying token, Bitcoin or BTC. Solving the puzzle requires specialized hardware. The more resources a miner spends, the more blocks they win. Solving the puzzle involves computing a large number of so-called hashes. The amount of resources that a miner has available is, therefore, called hash power.

Once miners solve a block, they post it to the P2P network. The new block is then shared around on the blockchain. Each miner who receives the block collects a new batch of transactions and starts mining a new block on top of the previous block, and each new block references the previous block. This way, successive blocks form a chain – hence the origin of the term blockchain.

Each block has a height and a weight. Block height counts successive blocks in the chain, whereas block weight is the accumulated difficulty of the block’s puzzles (and all of its predecessors).

Mining difficulty is adjusted regularly (every 2016 blocks [~2 weeks]) so that blocks are produced constantly even if the network’s available mining resources change.

The arrow shows that each block refers to the previous transaction

Each block plays an integral role in the blockchain’s security. Blocks build on one another as miners ensure the newly created blocks are aligned with older blocks, eliminating the possibility of double spending– when a cryptocurrency is spent more than once– and other rampant problems in traditional banking systems.

How Bitcoin is Secure and Decentralized

Satoshi Nakamoto’s configuration of Bitcoin’s consensus algorithm created a decentralized and secure Proof-of-Work (PoW) network where no single entity owns the data within the blockchain.

Because of PoW design, no single entity can change the state of the network. First, miners, who are in charge of submitting and verifying transactions, can be located anywhere in the world, making it almost impossible to shut down the network itself. Second, unlike other types of blockchain networks, no one can simply turn the blockchain off or on.

While Bitcoin is decentralized because of its distributed network of miners, it is secure because it would be difficult to control the network.

For an entity to overtake the network, it would have to accomplish two conditions in tandem:

  • Obtain enough specialized miners to produce more than 51% of the total hash rate and
  • Maintain 51% of the total hash rate until people start taking real-world action based on the blocks they have created

Due to the difficulty of the two conditions above concurrently happening, Bitcoin is secured from any potential attack. Furthermore, Bitcoin is secure since PoW relies on work produced from large amounts of electricity, equating to a large amount of money and a supply of energy.

According to Crypto51, which calculates the theoretical costs of 51% attacks on PoW networks, sustaining a one-hour attack on Bitcoin would cost more than $3 million. However, this cost is probably a vast underestimate since it is based on simply multiplying the marginal rental cost of hash power by the amount of hash power needed, but the amount of hash power required for a 51% attack on Bitcoin is not available on the open market.

Bitcoin Limitations that Inspired Kadena

The security and decentralization that Bitcoin offers are appealing. Despite the appeal, it is evident that the blockchain's limited capacity will impact its adoption for everyday use, especially as the user base and number of transactions grow. Additionally, with a capacity of around 7 to 10 transactions per second (tps), Bitcoin cannot compete with traditional payment systems that can process thousands of transactions per second—like Visa or Mastercard. Such limitations create an inability to scale, causing higher transaction fees and processing times.

Yet, where there is a challenge, there is also opportunity, which is where Kadena comes in.

These challenges inspired the founders of Kadena, Stuart Popejoy, and Will Martino, creators of JP Morgan's 1st blockchain, to create a PoW blockchain that improved Bitcoin’s single-chain design by enabling a scalable approach, without compromising security or efficiency.

With Kadena advisor Stuart Haber (co-inventor of the first blockchain in the early 1990s), Kadena paved the way for creating Chainweb. The braided chain architecture of Chainweb lets it inherit the security of single-chain PoW. But it can scale infinitely. Kadena’s network originally started out with 10 chains. Currently, it operates with 20 chains. As demand increases, it can scale to any number of chains.

Furthermore, Kadena can process many more transactions than Bitcoin at a fraction of the cost. The average cost of a Kadena transaction is around $0.0007, which creates enormous possibilities for businesses to utilize blockchain technology. On the contrary, we have seen Bitcoin transactions spike above $50 when the usage of its network increases.


The birth of Bitcoin in 2009 marked the era of blockchain technology as we know it today. It immediately challenged the traditional financial system with a decentralized and secure framework. However, despite its groundbreaking approach, Bitcoin's limitations began to surface as interest grew and more transactions started taking place on its network. Scalability and energy consumption started to be questioned, which paved the way for Kadena to take inspiration from Bitcoin and make blockchain more accessible.

The vision of Kadena’s Chainweb is to address the challenges that Bitcoin (and other blockchains) currently face by offering an efficient, secure, and scalable solution for the future of blockchain technology.

Want to learn more about Kadena’s ability to scale with Chainweb? Stay tuned for a series of articles that dives much deeper into scaling via our braided chain architecture.