A crypto network is a group of independent computers, called nodes, that run the same software and agree on one shared record of transactions without a central operator. Users send value by broadcasting digitally signed transactions to these nodes. The nodes check each transaction against the protocol's rules and add valid ones to a blockchain. A consensus mechanism decides which version of the record counts: proof-of-work in Bitcoin, proof-of-stake in Ethereum since 15 September 2022. The network's native coin pays the people who secure it.
The sections below cover each layer and the practical mistakes that follow from mixing them up.
Network, protocol and coin are three different things
People use these words as if they meant the same thing. They describe different layers:
- The network is the set of computers running the software and exchanging data.
- The protocol is the rulebook every node follows. It says what makes a transaction valid, how blocks are built and how nodes reach agreement.
- The coin or token is the unit the network uses to track balances and to pay for its own security.
The layers don't map one to one. A single network can carry many tokens: Ethereum settles its native ETH plus tokens built on the ERC-20 standard, which "introduces a standard for Fungible Tokens" and was proposed by Fabian Vogelsteller in November 2015. A token can also show up on more than one network through bridges, covered below.
What nodes do
Ethereum's documentation defines a node as "any instance of Ethereum client software that is connected to other computers". It defines a client as "an implementation of Ethereum that verifies data against the protocol rules and keeps the network secure."
Nodes differ in how much data they keep:
- Full nodes validate the chain block by block and keep relatively recent data. They can regenerate older data when needed.
- Archive nodes are full nodes that "verify every block from genesis and never delete any of the downloaded data." They can answer historical queries, such as an account balance at a past block.
- Light nodes download only block headers and ask full nodes for the rest. They "do not participate in consensus".
On Ethereum, a node runs two pieces of software. The execution client receives new transactions and runs them in the Ethereum Virtual Machine. The consensus client "implements the proof-of-stake consensus algorithm".
How consensus works
Proof-of-work: Bitcoin
The 2008 Bitcoin whitepaper lists the steps the network runs:
- New transactions are broadcast to all nodes.
- Each node collects new transactions into a block.
- Each node works on finding a difficult proof-of-work for its block.
- When a node finds one, it broadcasts the block to all nodes.
- Nodes accept the block only if all transactions in it are valid and not already spent.
- Nodes show they accept the block by building the next block on top of it.
When chains compete, "the longest chain, which has the greatest proof-of-work effort invested in it", wins. The system stays honest as long as "a majority of CPU power is controlled by honest nodes."
The pace is set in the rules. Every 2,016 blocks, Bitcoin adjusts the mining difficulty toward a target of 1,209,600 seconds, which is two weeks. That works out to an average of about 10 minutes per block.
Miners are paid in two ways. The first transaction in each block is a special one, the generation transaction, which creates new coins for whoever produced the block. Miners also collect the transaction fees in that block, which are the difference between each transaction's inputs and outputs.
Proof-of-stake: Ethereum
Ethereum switched from proof-of-work to proof-of-stake in the Merge on 15 September 2022. The Ethereum Foundation says this cut the network's energy use by about 99.95%. Validators now take the place of miners. To become a validator, "a user must deposit 32 ETH into the deposit contract".
Time is divided into slots of 12 seconds, grouped into epochs of 32 slots. A transaction reaches finality once it sits in a block that cannot change. Validators who break the rules can have "some or all of their staked ETH" destroyed, which is called slashing. That penalty takes the place of the electricity cost in proof-of-work.
Sent tokens on the wrong network?
Answer two questions to see what the article's sources say usually happens next.
Have you already sent the transfer?
- Not yet, I am about to send → Check the network first
- Yes, it went to a different network than the recipient expected → next question
Is the network the tokens landed on EVM-compatible, using the same 0x address format?
- Yes, it is EVM-compatible → Usually recoverable
- No, it is not EVM-compatible → Likely lost
- I am not sure → Find out before acting
Before any transfer, confirm that the network the recipient expects matches the network you are sending on. Transactions cannot be reversed once they go through.
One recovery phrase generates the same address across all EVM-compatible networks. The recipient can switch their wallet to that network and bridge the tokens back. Bridges carry their own risks, including dependence on the bridge's security.
According to the wallet maker cited in the article, tokens sent to an address on a network that is not EVM-compatible are likely gone for good.
Many EVM-compatible networks share the 0x address format, so a wrong-network transfer often goes through without a warning. Confirm which network received the tokens before you try a recovery, because the outcome depends on whether it is EVM-compatible.
This follows one wallet maker's general guidance only: it cannot check your transaction, does not cover custodial platforms or specific bridges, and does not guarantee recovery.
Wallets: what you actually control
A wallet does not hold coins. Ethereum's documentation calls it "an app or device that lets you hold, send and receive ETH and other tokens". Your assets stay on the network, and the wallet is the tool you use to manage them.
An account is a pair of keys. The public one produces the address you share. The private one signs your transactions and must stay secret. Most wallets give you a seed phrase, and Ethereum's guidance says it is "the only way you'll be able to recover your wallet." Transactions "can't be reversed."
When you leave assets with a centralised platform instead, you are trusting that company with custody. If it runs into financial trouble, your funds are at risk.
Bridges and the wrong-network mistake
Ethereum's documentation says "Bridges exist to connect blockchain networks". They move tokens, messages and data between chains that can't communicate on their own.
Bridges bring their own risks:
- Trusted bridges rely on outside verifiers, so you also depend on the security of the bridge itself.
- Hacks: bridges account for three of the biggest DeFi hacks.
- Wrapped tokens: when a wrapped token is exploited, the damage can spread across the ecosystem.
Mixing up networks is a common way to lose funds. Many networks that are compatible with the Ethereum Virtual Machine (EVM-compatible) use the same 0x address format, so a transfer to the wrong one often goes through without any warning. The wallet maker MetaMask says these cases are usually recoverable: one recovery phrase "generates the same address across all EVM-compatible networks". The recipient can switch to that network and bridge the tokens back. Sending to an address on a network that isn't EVM-compatible is different: "it's likely your tokens are gone forever."
The practical rule: before any transfer, check that the network the recipient expects matches the network you are sending on.
Limitations
This is a general explainer based on project documentation. Figures such as slot times, stake sizes and difficulty rules can change in future protocol upgrades.
