Crypto Foundations — course checkpoint

You arrived able to name a few coins. You leave able to say what a blockchain is, what it costs, what the words on your recovery card contain, and where money actually disappears.

Unit 1 — the ledger

A blockchain solves double-spend without a trusted middleman by having many independent parties keep the same append-only ledger under identical rules. It resists rewriting because each block's header contains the hash of the previous block, so editing one entry forces rebuilding every block after it — faster than the honest network builds new ones. Depth is the measure: confirmations.

Nodes verify; producers propose. A miner or validator that breaks the rules produces a block every node discards, earning nothing — which is why honesty is profitable rather than assumed. Removing the middleman costs redundancy, throughput, and finality that cuts both ways.

And the vocabulary that keeps people out of trouble: a coin is a chain's native asset that pays its fees; a token is a contract's balance table on somebody else's chain, deployable by anyone in minutes. The ticker is a label; the contract address is the identity.

Unit 2 — staying safe

• Irreversible. No chargeback, no recall, no reverse button. Wrong address, wrong network and unhandled contracts lose funds with no fraud involved. Send a test amount first, and verify addresses whole — never by their first and last four characters, which is what address poisoning exploits.
• The seed phrase is the wallet. Entered once, into software you deliberately chose to restore, on a device you control. Fake support, validation pages, counterfeit apps, migration lures and pre-seeded devices are one attack in different clothes.
• Approvals are the quiet one. approve lets a contract move your tokens later, usually unlimited and with no expiry; setApprovalForAll covers a whole NFT collection; permit does it from a signature alone. A hardware wallet does not prevent this — you authorised it. Read the verb, approve exact amounts, revoke periodically, compartmentalise addresses.
• Yield has four possible sources — lending, staking, trading fees, emissions — and each can fail, so none is guaranteed. 1% a day is 37.8× a year; the arithmetic is the tell. Rug pulls run on liquidity removal, honeypot code, hidden mint functions and unlocked allocations. And Mt. Gox, Celsius, Voyager and FTX all failed the same way: the app balance was a claim, not a holding.

Unit 3 — keys and wallets

Your keys are the asset, literally. Nothing is stored in a wallet; the ledger records what an address controls, and a private key is the only thing that can sign a transaction moving it. Bitcoin counts in UTXOs (outputs consumed whole, with change returned); Ethereum keeps a balance per account.

Derivation runs one way: a random 256-bit key → public key by curve multiplication → address by hashing. 2²⁵⁶ ≈ 1.16 × 10⁷⁷ is why an address can be published — provided the key really was random, which is why brain wallets were emptied in seconds.

A seed phrase is entropy in human-copyable form: 128 or 256 bits plus a checksum, sliced into 11-bit indexes into a 2048-word list, then stretched into a 512-bit seed that derives every address by path. Different wallet, different default path, same funds.

Custodial versus self-custody is a choice of failure mode, not of safety: custody fails when someone else is dishonest or insolvent; self-custody fails when you are careless — and 2 to 4 million bitcoin are estimated to be permanently stranded behind lost keys.

Unit 4 — the two networks

• Bitcoin's supply: the subsidy halves every 210,000 blocks (≈4 years) — 50 → 25 → 12.5 → 6.25 → 3.125 — and 210,000 × 100 = 21,000,000 to the nearest round number, with an exact ceiling of 20,999,999.9769 BTC once integer-satoshi rounding is counted, reached near 2140.
• Proof of work: guess nonces until the header hash falls below target; difficulty readjusts every 2016 blocks to hold ten-minute blocks; the winner takes the subsidy plus all block fees.
• Proof of stake: since the Merge on 15 September 2022, Ethereum validators stake 32 ETH, attest, and are slashed only for provably contradictory behaviour. Energy use fell about 99.9%.
• Gas is a meter of computational work — 21,000 for a plain transfer — priced in gwei as a burned base fee plus a priority tip. Blocks target half the gas limit and cap at the limit itself, 30M and 60M since December 2025, so "expensive today" means congestion, not price. Failed transactions still cost the fee.

What this course deliberately did not do

It did not tell you to buy anything, forecast a price, endorse any exchange, wallet, device or token, or describe any asset as safe. Crypto assets are highly volatile, total losses have happened repeatedly, and self-custody mistakes cannot be reversed by anyone. What you have instead is the ability to read what is in front of you — which is the only thing that has ever helped.

Before you sit it

Each of these is a minute at your desk. Any one that is not names the lesson to reopen first.

• Say what makes rewriting a blockchain expensive rather than merely difficult — Why is a blockchain hard to rewrite?
• Say what a token approval grants, and how that empties a wallet — What is a token approval, and how does it drain a wallet?
• Say what you actually own when you own crypto — What do you actually own when you own crypto?
• Say what gas pays for — What is gas, and why is "the network expensive today"?

Try it now

1. Explain to someone else, without notes, why editing one old block forces rebuilding every block after it. If it comes out cleanly, Unit 1 is yours.
2. On a block explorer, open one transaction and identify its confirmations, fee, status, and the absence of any control that could undo it. Four units, one screen.
3. Both networks are below over the same window. Measure the largest drawdown on each, write the two numbers down, and note that neither of them is unusual for this asset class. Then take the checkpoint quiz.