Blockchain and Cryptocurrency Fundamentals
This domain tests how well you understand the data structures you will later trace: the two ledger models, how addresses derive from keys, how transactions encode value and fees, and what consensus finality means for evidential certainty.
Ledger models
- UTXO (Bitcoin): coins are unspent outputs; a transaction consumes whole outputs and creates new ones. Wallets hold keys, not balances. Change is a normal output.
- Account model (Ethereum, EVM chains, TRON): state maps addresses to balance, nonce and code. Token balances sit in contract storage, not in the native value field.
Addresses and transactions
- Bitcoin P2PKH addresses are Base58Check of HASH160(pubkey); SegWit uses bech32/bech32m. Ethereum addresses are the last 20 bytes of Keccak-256 of the public key, with EIP-55 checksum casing.
- Bitcoin fees equal inputs minus outputs. Ethereum fees are gas used × effective gas price; EIP-1559 burns the base fee and pays the priority fee to the validator.
Worked example
Inputs of 1.5 BTC and 0.8 BTC fund outputs of 2.0 BTC and 0.29 BTC. Total in = 2.3 BTC; total out = 2.29 BTC; fee = 0.01 BTC. The 0.29 BTC output is probably change because it is a new address, matches the input script type, and the 2.0 BTC output is the round payment. Reasoning alone does not prove ownership; confirm with later spending behaviour or KYC data.
Traps
- Calling an address a wallet, or a cluster a person.
- Assuming all inputs to one transaction have one human owner (CoinJoin breaks this).
- Treating an ERC-20 transfer as a native ETH transfer - the transaction value is often zero and the transfer appears in event logs.
- Treating one confirmation as irreversible; reorgs happen.