Nerd Notes

Section 1: Covering fundamentals

3 Chapters

Estimated ~ 1 hour 45 min read

At the end of this lesson you will know: What a blockchain is and it’s importance in the creation of bitcoin and all digital currencies. How blockchains works and who operates them. Why Bitcoin is Gold 2.0. How Ethereum is chaning the world of finance. 

At the end of this lesson, you will know: The cheapest and fastest way to buy crypto. Sending and exchanging coins. What base currencies are used for. Storing you coins. 

At the end of this lesson you will know: What the top five crypto blockahins are. What each blockchain does and  their value propositions. How to properly DYOR before investing in crypto coins. 

Terms to Know

Hover over the card to see the definition

Blockchain

A digital ledger of transactions maintained by a peer to peer network. There are many blockchains with unique use cases. Ethereum, for example, was the first blockchain to incorporate smart contacts.

Stable coins & base currency

USDT, UST, USDC, and DAI are the most common stable coins. They are all pegged to the dollar. 1 DAI = $1.
A base currency used to buy other coins. For example, you will see these pairs: BTC/USDT and ETH/USDT. In this pair we use USDT to buy BTC and ETH.

Layer one

A layer 1 is the primary, or base level, blockchain. It defines specific protocols, such as POS or POW for the blockchain. The Bitcoin, Ethereum, and Cardano blockchains are all layer 1.

layer zero & interoperability

Interoperability is the ability for multiple blockchains to share and communicate data with each other. Fundamentally, a layer 0 blockchain connects all the blockchains together. Polkadot, Cosmos, and Harmony One are all layer 0 blockchains.

POS, POW

Proof of Stake (POS) and Proof of Work (POW) are ways of verifying transaction on a blockchain. For example, BTC uses POW so that all miners (computers) must correctly answer the same math question and agree on the answer to verify the transaction.

Smart contracts

A program that automatically executes given all the right conditions. Smart contacts is what allows for the development of applications on top of blockchains.

Layer two

A layer two is a network built on top of the layer one's protocol to improve its scalability or efficiency. For example, the layer two Lightning Network in built onto of Bitcoin to enable transactions faster than VISA!

Coin vs. token

A coin is the currency used to pay for gas fees on a particular blockchian. For example, ETH is a coin used to pay for gas fees on the Ethereum blockchain.
A token, built on an existing blockchain, is used for utility or governance. For example, the AAVE token is built on top of the Ethereum blockchain.
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