Blockchain Basics

1. A shared ledger

A blockchain is a record of transactions that many computers keep at the same time. No single bank or company holds the master copy. Every participant can check the whole history for themselves.

Transactions are grouped into blocks. Each block includes a cryptographic hash of the block before it, a short fingerprint that changes completely if even one character of the earlier block changes. That link is what makes the chain: rewriting an old block would break every block after it, and the rest of the network would reject the altered copy.

The result is a ledger that is append-only in practice. New entries are added to the end, and old ones stay put.

• Distributed: thousands of independent copies, not one database.
• Linked: each block commits to the one before it with a hash.
• Tamper-evident: changing history is visible to everyone.

2. Keys, wallets, and addresses

Ownership on a blockchain is proven with public-key cryptography. You hold a private key, a secret number. From it comes a public key and an address that you can share with anyone, like an account number.

Sending funds means signing a transaction with your private key. The network checks the signature against your public key without ever seeing the private key.

A wallet does not hold coins. The coins are recorded on the blockchain. A wallet holds your keys, usually backed up as a 12- or 24-word recovery phrase. Anyone who has that phrase controls the funds, and if you lose it with no other backup, nobody can restore it for you.

• Address: safe to share. Private key and recovery phrase: never share.
• Self-custody means you hold the keys. Custodial means a company holds them for you.

3. How the network agrees

Without a central authority, the network needs a rule for deciding which new block is valid and in what order transactions happened. That rule is called consensus. It is what stops someone from spending the same coin twice.

Proof of work, used by Bitcoin, has miners compete to solve a costly computational puzzle. The winner adds the next block and earns newly issued coins plus fees. Rewriting history would mean redoing that work faster than the rest of the network combined.

Proof of stake, used by Ethereum since 2022, has validators lock up coins as collateral. Validators that follow the rules earn rewards. Validators that cheat can lose part of their stake. It uses far less energy than proof of work.

4. Bitcoin, Ethereum, and smart contracts

Bitcoin launched in 2009 as peer-to-peer electronic cash. Its supply is capped at 21 million coins, and new issuance halves roughly every four years. Many people treat it as a long-term store of value.

Ethereum launched in 2015 with a different goal: a shared computer. It runs smart contracts, programs stored on the blockchain that execute exactly as written when someone calls them. Lending markets, exchanges, and token issuers are built from smart contracts (lesson 6).

Every transaction pays a fee. On Ethereum that fee is called gas and pays for the computation the transaction uses.

5. Tokens, stablecoins, and NFTs

A token is an asset created by a smart contract on an existing blockchain rather than by a blockchain of its own.

Stablecoins are tokens designed to hold a steady value, usually one US dollar, backed by cash and short-term Treasury bills held by the issuer. Since the federal GENIUS Act of 2025, US payment stablecoins must hold at least one dollar of such reserves for every dollar issued. They are widely used for payments and for moving dollars between exchanges.

A non-fungible token (NFT) is a token where each unit is unique. NFTs can represent art, tickets, memberships, or credentials. The NHBC membership credential is one example.

6. DeFi: finance built from smart contracts

Decentralized finance, or DeFi, is financial services run by smart contracts instead of a bank or broker. Anyone with a wallet can use them, at any hour, and the rules are public code rather than terms set by a company.

A decentralized exchange lets people trade one token for another straight from their wallets. Instead of matching buyers and sellers through a company, many exchanges use a liquidity pool: a smart contract holding two tokens that prices trades by formula. People who deposit tokens into the pool earn a share of the trading fees.

Lending protocols let you deposit crypto to earn interest, or borrow against it. Loans are over-collateralized: you must lock up more value than you borrow. If your collateral falls too far in value, the contract automatically sells it to repay the loan. That is called liquidation.

• Smart-contract risk: a bug in the code can drain funds, and there is usually no insurer.
• Liquidation risk: a sharp price drop can sell your collateral before you can react.
• Scam risk: anyone can launch a token or pool, including ones built to disappear with deposits (a rug pull).
• Yields that look too good usually carry risk you cannot see.

7. Tokenized real-world assets and other uses

Tokenization puts a claim on an off-chain asset onto a blockchain. Tokenized US Treasury bills, money-market funds, private credit, real estate shares, and commodities such as gold already exist. Large asset managers including Franklin Templeton and BlackRock run tokenized Treasury and money-market funds, and tokenized Treasuries now total billions of dollars.

The appeal is speed and reach: tokens can settle in minutes instead of days, trade around the clock, be split into small fractions, and plug into smart contracts, so a tokenized Treasury can serve as collateral in a lending protocol.

The catch is that the blockchain only records the token. Someone off-chain, the issuer or a custodian, still holds the real asset and has to honor redemptions. A tokenized asset is only as trustworthy as that party and the legal agreements behind it, and many of these products, such as tokenized funds, are regulated as securities.

Blockchains are also used well beyond finance.

• Payments and remittances: stablecoins move dollars across borders in minutes for a small fee.
• Supply chains: a shared record of where goods came from and who handled them.
• Credentials: tamper-evident diplomas, licenses, and memberships, like the NHBC membership credential.
• Public records: land titles and filings that anyone can verify.
• Governance: transparent voting records for organizations whose members hold tokens.

8. Agentic commerce: when software pays

AI agents are programs that can take actions on your behalf: comparing prices, booking a trip, or buying data and computing time for another program. Agentic commerce is agents paying for things themselves.

Card payments were built for a person at a checkout page. Agents need something else: payments a program can make by itself, at any hour, in amounts as small as a fraction of a cent. Stablecoins and blockchain wallets fit that job, because a program can hold a wallet, sign a payment, and have it settle in seconds.

Open standards for this are emerging. One example is x402, released by Coinbase in 2025 and now overseen by a foundation it co-governs with Cloudflare. It uses the web's long-unused HTTP 402 "Payment Required" status so a website can ask an agent to pay per request, and the agent pays in a stablecoin without creating an account.

Handing money to software raises new questions: who is responsible when an agent overspends or is tricked, and how does a merchant know the agent is really acting for you?

• Give an agent its own wallet with a small balance, not your main keys.
• Set spending limits and an allow-list of what it may buy.
• Keep a person in the loop for large or unusual purchases.
• Review what it spent, the same way you would check a card statement.

9. Staying safe

Blockchain transactions are generally final. There is no chargeback and no fraud department that can reverse a payment. That makes scams costly, so a few habits matter more than anything else.

• Never give anyone your recovery phrase. No legitimate company, support agent, or wallet will ask for it.
• Check the full address before you send, and send a small test amount first for large transfers.
• Be wary of guaranteed returns, urgent pressure, and people you met online who steer you toward a specific platform.
• Use a hardware wallet for savings you plan to hold.
• In the US, the IRS treats digital assets as property, so selling or spending them can be a taxable event. Keep records.

10. Blockchain in New Hampshire

New Hampshire has been an early mover on digital assets. In May 2025 it became the first state to let its treasury hold bitcoin as a reserve asset. The law, HB 302, allows the state treasurer to invest up to 5% of certain public funds in digital assets with a market capitalization above $500 billion, a bar that only bitcoin currently clears. It permits those purchases; it does not require them.

The New Hampshire Blockchain Council brings together businesses, builders, and residents to support sound blockchain policy and education in the state. Finishing this course is a good first step toward joining that conversation.

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