Blockchain Basics
Understand the foundation of all cryptocurrency — the blockchain.
0 of 5 completedWhat is a Blockchain?
A blockchain is a distributed digital ledger that records transactions across many computers. Think of it as a shared Google Doc that thousands of people can read, but no single person can secretly edit.
Each "block" contains a set of transactions. Once a block is full, it's cryptographically sealed and linked to the previous block — forming a "chain." This makes the history of all transactions permanent and tamper-proof.
Key properties of blockchain: Decentralized (no single authority), Immutable (records can't be altered), Transparent (anyone can verify), Secure (cryptographic protection).
What makes blockchain records tamper-proof?
How Crypto Transactions Work
When you send cryptocurrency to someone, the transaction is broadcast to a network of computers called "nodes." These nodes validate the transaction using consensus mechanisms.
Step 1: You initiate a transaction with your private key (like a digital signature).
Step 2: The transaction is broadcast to the peer-to-peer network.
Step 3: Nodes validate the transaction.
Step 4: The transaction is grouped with others into a block.
Step 5: The block is added to the chain — the transaction is complete.
Bitcoin transactions take ~10 minutes; Solana takes less than a second.
What is used to authorize a crypto transaction?
Proof of Work vs Proof of Stake
Blockchains need a way to agree on which transactions are valid — this is called a "consensus mechanism."
Proof of Work (PoW) — Used by Bitcoin. Miners compete to solve complex math puzzles using computing power. The winner adds the next block and earns rewards. Energy-intensive but extremely secure.
Proof of Stake (PoS) — Used by Ethereum (since "The Merge"), Cardano, Solana. Validators "stake" (lock up) their crypto as collateral. They're chosen to validate blocks proportionally to their stake. 99% more energy-efficient than PoW.
Which consensus mechanism does Bitcoin use?
Crypto Wallets Explained
A crypto wallet doesn't actually store your coins — it stores your private keys, which give you access to your funds on the blockchain.
Hot Wallets: Connected to the internet. Examples: MetaMask, Trust Wallet. Convenient for everyday use but more vulnerable to hacks.
Cold Wallets (Hardware Wallets): Offline storage. Examples: Ledger, Trezor. Much safer for large holdings — your private keys never touch the internet.
Seed Phrase: A 12-24 word recovery phrase that backs up your wallet. Write it on paper. Never store it digitally. Never share it. Anyone with your seed phrase has full access to your funds.
What is a "seed phrase" used for?
DeFi: Decentralized Finance
DeFi is the umbrella term for financial services built on blockchain — without banks, brokers, or intermediaries.
Key DeFi primitives:
• DEX (Decentralized Exchange): Trade tokens directly (Uniswap, PancakeSwap)
• Lending/Borrowing: Earn interest or take loans with crypto collateral (Aave, Compound)
• Yield Farming: Provide liquidity and earn rewards
• Stablecoins: Price-stable tokens pegged to USD (USDC, DAI)
DeFi is permissionless — anyone with a wallet can use it. But it's also risky: smart contract bugs, rug pulls, and impermanent loss are real dangers. Always DYOR (Do Your Own Research) before providing liquidity or using new protocols.
What is a DEX?