AI x Crypto Lesson 1: What is Crypto and Blockchain?

Before we dive it, take this Crypto and Blockchain Cheat sheet-a quick, printable snap shot you can keep open while you read! 🤟✌️ 

1. Introduction

When people first hear about crypto, they usually think of two things:

• “Is this just gambling?”

• “It looks too technical for me.”

In this first lesson, my job is to remove that fear.

I’m not going to throw charts or complicated trading strategies at you. Instead, I want to give you a clear mental picture of what crypto actually is, why it exists, how blockchain works, and what the difference is between coins and tokens.

By the end of this lesson, you’ll be able to explain these ideas in simple language and you’ll see how AI tools can act like your personal tutor along the way.

2. What Is Cryptocurrency?

A cryptocurrency is a form of digital money that uses cryptography and blockchain technology to secure transactions and control new issuance.

Key characteristics:

• Exists only in digital form.

• Transactions are recorded on a blockchain instead of in a bank’s private database.

• Control is often spread across a network of computers instead of a single authority.

The first major cryptocurrency was Bitcoin $BTC ( ▼ 1.18% ) , created in 2009 by Satoshi Nakamoto

Bitcoin introduced the idea of peer-to-peer digital cash: value can move directly from one person to another over the internet, without a bank in the middle.

Then later on, many other cryptocurrencies appeared, such as Ethereum $ETH ( ▼ 3.91% ) , and thousands of different tokens built on top of various blockchains.

The rest of this lesson will explain to you the core technology that makes this possible: blockchain.

3. What Is a Blockchain?

You’ll hear this word a LOT, so let’s keep it simple and practical.

3.1 Simple Definition

A blockchain is a special type of database that records transactions in a secure, transparent, and tamper-resistant way.

Characteristics:

• Transactions are grouped into blocks.

• Each block is linked to the previous one, forming a chain of blocks.

• The full chain is stored and shared across many computers around the world.

I like to think of it as a public notebook or a shared Google Sheet that everyone can see, but nobody can secretly edit it.

3.2 Everyday Analogy: Public Ledger or Shared Spreadsheet

Imagine this, a practical analogy is a shared online spreadsheet:

• You can imagine a spreadsheet where every row records a transaction: who sent something, who received it, and how much.

• Many people around the world keep a copy of this spreadsheet.

• When a new transaction happens, it is added to the spreadsheet only after certain rules are checked.

• Once a row is added, it cannot be secretly changed without everyone noticing.

Blockchain also works in a similar way, but with stronger security and no single company in control.

3.3 Why Blockchain Matters

So why “blockchain”?

• Transactions are grouped into blocks

• Each block is linked (or “chained”) to the previous block.

• This chain of blocks, from the very beginning until now, is the blockchain.

Think of it like:

• Every 10–15 seconds (or every few minutes, depending on the chain), a “page” of new transactions is added to the book.

• That page is connected cryptographically to the page before it.

• If someone tries to change a past page, the whole chain breaks - and everyone else on the network notices.

However, for beginners, the most important point is this:

A blockchain is a shared, secure, and transparent record of transactions.

Now let’s say:

• You have 1 ETH (Ether) in your wallet.

• You want to send 0.2 ETH to your friend.

What happens?

1. You open your wallet app.

2. You enter your friend’s wallet address and the amount.

3. You hit “Send” and confirm.

4. Your transaction is broadcast to the network of Ethereum nodes (computers running Ethereum).

5. Those nodes check:

   • Do you have enough balance?

   • Is the transaction valid?

6. Once confirmed, your transaction is added to a new block.

7. That block gets attached to the chain.

Now the whole network agrees that:

• Your balance = 0.8 ETH.

• Your friend’s balance increased by 0.2 ETH.

No bank, no fax, no forms.

4. Coins vs Tokens

Let’s continue with Coins and Tokens, believe me. You’ll hear these two words all the time!

In the crypto world, the words coin and token are used frequently. Understanding the difference is essential for this course, especially because later lessons focus heavily on tokens and token launches.

4.1 What Is a Coin?

To answer that, a coin is a cryptocurrency that runs on its own blockchain.

For examples:

• Bitcoin (BTC)-runs on the Bitcoin blockchain.

• Ether (ETH)-runs on the Ethereum blockchain.

• BNB $BNB ( ▼ 4.17% ) -runs on BNB Chain (formerly Binance Smart Chain ecosystem) .

• SOL $SOL ( ▼ 4.55% )(Solana)-runs on the Solana blockchain.

• ADA $ADA ( ▼ 6.47% )  (Cardano)-runs on the Cardano blockchain.

You can think of a coin like the official currency of a country:

• Japan → Yen

• USA → Dollar

• Eurozone → Euro

When a transfer of Bitcoin is made, the Bitcoin blockchain updates balances.

When a transfer of Ether is made, the Ethereum blockchain updates balances.

4.2 What Is a Token?

A token is a digital asset that is created on top of an existing blockchain. It does not have its own separate blockchain.

Examples:

• USDT (Tether) -a stablecoin on multiple chains, often as an ERC-20 token.

• USDC -another stablecoin.

• UNI -the Uniswap token.

• LINK -Chainlink token.

• SHIB $SHIB ( ▼ 3.67% )  (Shiba Inu) -a meme token.

These tokens use the underlying blockchain’s infrastructure.

The blockchain handles:

• Security

• Recording of transfers

• Execution of smart contracts

The token itself represents something defined by its smart contract. A token can represent:

• A meme project or community coin.

• A governance or voting right in a protocol.

• A utility inside a game or application.

• Points, rewards, or access rights to certain features.

4.3 Simple Analogy: City and Businesses

Here is a useful mental model:

• A blockchain (such as Ethereum or BSC) is like a city.

• The coin (such as ETH or BNB) is like the official currency of that city.

• Tokens are like businesses, vouchers, or company “points” operating within that city, using the city’s basic infrastructure (roads, electricity, etc.)

Referring to this picture, tokens rely on the city’s infrastructure (the blockchain) but do not build an entire new city themselves.

4.4 Focus of This Course

In this course, I will focus mostly on tokens, especially:

• Tokens on EVM-compatible chains (for example, Binance Smart Chain and Ethereum).

• Tokens that follow standards like BEP-20 or ERC-20.

Here is the reason:

• Launching a new, full blockchain is highly complex and not required for most projects.

• Creating a token on an existing blockchain is much more accessible for beginners.

• Launchpads and decentralized exchanges (covered later in the course) are designed to work easily with these token standards.

By you understanding the concepts of coin and token at this level is enough to move forward to your wallet, DEX, and launchpad lessons.

5. How AI Helps in This Lesson

Now, let me show you where AI tools can fit into this lesson.

I don’t expect you to understand everything perfectly the first time. That’s normal. I’ve re-learned many of these concepts multiple times from different angles.

5.1 AI as a Personal Explainer

Complex ideas often become clearer when explained in different ways by using AI models such as ChatGPT, Claude, Gemini, or similar tools. They can:

• Rephrase technical definitions into simple language.

• Provide multiple analogies (for example, using sports, shopping, or daily life).

• Adjust explanations to a preferred style: short summary, bullet list, or story format.

Example requests to an AI tool:

• “Explain what a blockchain is using a supermarket analogy, in less than 150 words, suitable for a complete beginner.

• “Explain the difference between a coin and a token using the idea of a city and businesses, without technical jargon.”

• “Summarize the concept of cryptocurrency in 5 bullet points for someone with no finance background.”

5.2 AI for Checking Understanding

If you feel something is too vague for example “blockchain is a distributed ledger” you can ask an AI tool.

Examples:

• You can type a self-written explanation of blockchain and ask:

  “Review this explanation of blockchain and improve clarity while keeping it beginner-friendly.”

• Your can describe the difference between coins and tokens in personal words and ask:

  “Highlight any mistakes in this explanation and correct them, using simple language.”

In this way, AI will act like a tutor that reviews notes and give you feedback instantly.

5.3 AI for Summarizing External Content

If you watch a YouTube video about blockchain or read an article that’s too long, you can copy the transcript or text into an AI tool and say:

• “Summarize this in 10 bullet points.”

• “Rewrite this text in simple language for a complete beginner.”

• “What are the 3 most important ideas in this video?”

5.4 AI for Building a Personal Glossary

New terms can appear constantly in the crypto world so instead of memorizing all at once, you can build a simple personal glossary with AI assistance.

Process:

1. When a new term appears (for example, “decentralization”, “node”, “gas fee”), ask an AI tool:

   “Explain the term ‘gas fee’ in one short paragraph and give a simple real-world analogy.”

2. Copy the explanation into a notes app under a heading like “Crypto Glossary”.

3. Repeat as new terms appear in later lessons.

Our goal is not to become an expert in one answer. Our goal is to chip away the confusion bit by bit.

6. Key Takeaways from Lesson 1

1. Cryptocurrencies emerged to provide a more open, borderless, and digital form of money and value transfer.

2. A blockchain is a shared, secure, and transparent record of transactions, maintained by many computers rather than a single central authority.

3. Coins run on their own blockchains, while tokens are built on top of existing blockchains such as Ethereum or BSC.

4. In this course, we’ll focus mainly on tokens, because that’s where most new projects, launchpads, and DeFi actions happen.

5. AI tools can act as a constant tutor: explaining, simplifying, summarizing, and correcting understanding whenever needed.

For now, if you just remember one thing from this lesson, let it be this:

Crypto is not just about “getting rich quick.” It’s a new way to represent and move value on the internet, and you now understand the foundations of how it works.

From here, we will move into Lesson 2, where I will talk about:

• The difference between centralized exchanges (CEX) and decentralized exchanges (DEX).

• Why people say, “Not your keys, not your crypto”.

• And again, how AI can help you make sense of it without feeling overwhelmed.

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