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EEA 2021 Lesson Plan: Blockchain Basics

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VIRGINIA ECONOMIC EDUCATOR AWARDSMiddlesex High SchoolMiddlesex County Public Schools Christine PedersenAuthor:Blockchain BasicsLESSON PLAN 2021

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LESSON DESCRIPTION:Most students have heard of Dogecoin and Bitcoin, and they are interested in these cryp-tocurrencies. Students will leave the lesson understanding what blockchain is, what cryp-tocurrency is, what a non-fungible token (NFT) is, and how one can obtain cryptocurrency. The lesson includes a look at what money is currently, and explores whether cryptocur-rency is money. Looking under the hood of cryptocurrency at the blockchain technology that supports it, we can see a lot of other applications for blockchain, such as creating NFTs which make authentification and ownership of digital assets possible. As we learn about this emerging technology that will influence our lives in unexpected, unpredictable ways, students will respond to the real world issues this lesson explores. This lesson plan includes a Nearpod that can be adapted to self-paced, remote, or face-to-face collaborative learning, as well as Google slides, and a Google site for fully remote independent learning.Understanding the characteristics and purposes of money helps students evaluate its im-portance. Do we need cash? Is cryptocurrency able to do the things money is supposed to do? And understanding the importance of ownership (and ownership structures) is fundamental to economics. Students see how being able to own a meme allows people to control their own property and make a profit. Looking at the basics of blockchain and how it might change things in the future also gives students some potential areas for ca-reer preparation. Overall, looking at this timely, high-interest topic will help students think in terms of the larger systems at play, and the economics bubbling below the surface of so much that surrounds them every day.Author: Lauren Shifflett & Laura Sunder-Rao | Elkton Elementary SchoolAuthor: Christine Pedersen | Middlesex County Public SchoolsLEVEL:High SchoolMATERIALS:• Paper Clips• 6 binder clasps• 3 clear page protectors• 1 envelope• index cards for students• Handouts: one each of Visual #1, Visual #2, Visual #3, Handout #3, 8 of Handout #1, and 24 of Handout #2• Link to materials here: REQUIRED:90 -120 minutes (one or two class periods)Blockchain Basics

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ECONOMIC OR PERSONAL FINANCE TOPICS:This lesson focuses on two big economic ideas: financial systems matter and ownership changes things.SOLS:EPF 6a The student will demonstrate knowledge of the nation’s financial system by a) defining the role of money.EPF 6b The student will demonstrate knowledge of the nation’s financial system by b) explaining the role of financial markets and financial institutions. Financial institutions act as intermediaries by facilitating the interaction of borrowers and savers in financial markets. EPF 8b The student will demonstrate knowledge of the role of government in a market economy by b) identifying the role the government plays in providing a legal structure to protect property rights and enforce contracts. PROCEDURES:A. IntroductionTEACHER: Tell the students you are going to talk about cryptocurrency today, but first, you want to do two short activities. Their job is to participate and/or remember what hap-pens. Challenge them to see if they can figure out WHY you are playing these games. Also, challenge them to stay quiet about it if they figure it out!Activity One: The Gossip GameTEACHER: Tell students you are going to play an old fashioned game called “Gos-sip.” Whisper to the first student this phrase on Visual #1 (Do NOT display at this time!) “Uniswap has a unicorn logo, ANKR’s logo looks like an anchor, and Dogecoin is based on a Shiba Inu, but Bitcoin and Ether don’t have mascots.” Each student should whisper as much as they can remember to the student beside them, until all students have passed along the message. When the last student receives the message, ask the final student to say the message out loud. What they will say is probably very different from the original message.Ask the students--”How sure are you that we got everything correct?“Then display your original message from Visual #1 on the board.Say, “Now let’s do another activity.”Activity Two: Distributed Ledger simulation (Need 3 transparent page protectors, 15 or more paperclips and 6 binder clips, 8 copies of Handout #1, 24 copies of Handout #2, one copy of Handout #3. PRIOR TO LESSON: Make at least 8 copies of Handout #1 and place them in a transparent box/file folder/page protector. Author: Christine Pedersen | Middlesex County Public Schools

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Author: Lauren Shifflett & Laura Sunder-Rao | Elkton Elementary SchoolAuthor: Christine Pedersen | Middlesex County Public SchoolsTEACHER: Pass out 2 copies of Handout #2 to each of 8 students. [You could also have your entire class participate, but that might take too much time for everyone to check themselves and each other for accuracy.] On the whiteboard, show the first 3 transac-tions on Visual #2 and also in the Nearpod, one at a time. Have students write down the transactions including the time they wrote them down (try to give one minute apart). Let students compare their sheets as they go. If anyone has made an error, don’t collect that sheet at the end (the majority rules when there’s an error). When the last person has writ-ten the transaction down, collect the sheets. Tell them in the real world they’d keep a copy for themselves because it’s all digital, and put the collected sheets in another transpar-ent box/file folder/page protector. Use a rubber band or some other item like a carabiner clip or string of paper clips to attach the transparent block of Handouts #1 and Handouts #2. Have students complete the next round of transactions on the whiteboard or from the Nearpod, writing their transactions on Handout #2, using Visual #3’s numbers. Qui-etly slip Handout #3 to a nearby student and whisper for them to record this transac-tion. Have them all compare transactions. The side transaction should be thrown into the trash, as policed by the other 7, and should not go into the third transparent box/file folder/page protector. Then, after students have compared to verify their transactions are complete and correct, collect them up and put them in a third transparent box/file folder/page protector, linking it to the 2nd box in the same manner as you did the first time.Ask the students--”How sure are you that we got everything correct?”Give students an index card and ask them to jot down why they think you did these two activities when you will be talking about cryptocurrency.STUDENT DISCUSSION: Ask if anyone wants to share their answer from the index card. TEACHER: As you discuss student guesses, explain that when it’s important to get it right, making sure information is communicated in a way that is open and transparent,not whispered secretly from person to person, is really vital. And especially when those situ-ations involve people’s money. Point out that in the Gossip Game everyone was probably doing their best to repeat what they thought they heard, but maybe somebody purposely changed the message to be funny or because they couldn’t understand and just made it up. But no one knew the point when good information was being lost, or bad information was being passed along--so no one could stop and correct it.Activity Two: Shows how blockchain technology works. Everyone in the group can see all the work of everyone else and can audit each transaction before it’s recorded. There is no room for error in this scenario.Say, “You might not have a lot of experience with cryptocurrency but I bet you have plenty of experience with money. So let’s talk about that.”B. Money Today and Our Current Financial SystemTEACHER: “What is money? Basically anything we agree to use. We could use lots of dif-ferent things, but we settled on bills and coins”. Go over the 6 characteristics and 3 purposes of money.Say, “We can keep track of how much money we have, we can trade it for things, and we can keep it. If you work for an hour and someone pays you $10 for it, you are

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basically turning your time into money. That $10 lets you hold onto the value of your work and save it up for later.STUDENT DISCUSSION: Why do people accept pieces of paper for something like a pair of shoes or a new car? Why couldn’t you use Post-It notes, or index cards?TEACHER: We used to be on something called the gold standard, so you could take any paper money issued and trade it for the gold that backed it up. Gold is commodity mon-ey. One ounce of gold is the same as any other ounce of gold. We say it has intrinsic value, it’s worth something in and of itself. But now our paper money is not backed up by a corresponding amount of gold. It is backed by the full faith and credit of the US government. We call this “fiat money,” from the Latin which basically means “by decree.” The government declares it to be money, so it is.And our money is the most stable and sought after currency in the world. We are not backed up by a precious metal, but by the US government. And our word is as good as gold.But, even though you’ve handled money all your life, have you ever thought about how we actually make money and get it into people’s hands?How do we create money now? The US Mint for coins and the US Treasury for paper money.How do we distribute money? It goes to the Federal Reserve (which is our central bank but is not a part of the government) which sends it to the banks.C. The Coming System? CryptocurrencyCrypto currency is decentralized finance (DeFi), as opposed to a central bank; this is “an alternative financial infrastructure built on top of the Ethereum blockchain. DeFi uses smart contracts to create protocols that replicate existing financial services in a more open, interoperable, and transparent way.” [From]STUDENT DISCUSSION: Is cryptocurrency really money? People definitely treat it like it is. Do you think cryptocurrency meets the benchmarks for being money? (Discuss with your elbow partner, then your table partners). What did the group think? [answers may vary widely].TEACHER: Here is what Jerome Powell, the Chair of the Federal Reserve, said in March of 2021: you couldn’t answer this question to your own satisfaction, because you need to know more about how cryptocurrency works before you can say if it is really money. Crypto runs on blockchain. It has a distributed ledger system, with unchangeable record keeping, and you can run smart contracts (which are lines of code that execute automati-cally when conditions are met) on the blockchain. [Watch the 1:24 minute video on what is blockchain from IBM’s website: It’s Author: Christine Pedersen | Middlesex County Public Schools

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Author: Lauren Shifflett & Laura Sunder-Rao | Elkton Elementary SchoolAuthor: Christine Pedersen | Middlesex County Public Schoolsthe Part 1 video under the “Blockchain 101 in 5 minutes” section.] Now, let’s look at a video that goes into a little more detail. [Watch the 6 minute video up your end product from Activity 2 and say, “When we did the activity with every-one writing down the transactions--we were simulating blockchain technology. Con-gratulations--you probably understand blockchain better than most people! Blockchain technology gives us powerful new ways to do things. It’s a game changer, like the internet was a game changer.”So how does Bitcoin work? Let’s watch a short video for an explanation. [Show the 1:44 You-Tube Video “What is Bitcoin” at How To Use CryptocurrencyTEACHER: Tell students that just like you can’t drive a car without the keys, you will need to get a digital wallet to do anything with Bitcoin. They will get a public key (their account number) and a private key (their password.) Discuss how, if they choose a non-custodial wallet like Metamask, it will be more secure than a hosted wallet, but there will be NO PASSWORD HELP. So if you lose your password, you lose all your money. Tell them the maker of the video “What is Bitcoin” was paid 7002 Bitcoin for his work, which is about three hundred million dollars now. [to update this figure, you can look at the price of Bit-coin at Say “Losing the keys to your digital wallet is a risk. In our cur-rent financial system, someone at your bank could help you. But a Decentralized Finance or DeFi world puts that responsibility on you. It’s a double edged sword. So, I think you are seeing why the type of financial system we decide we want to have is really a big deal. It’s one of those important issues that you would do well to pay attention to.” Spending cryptocurrency looks a little different from spending ‘real’ money. Look at the steps in the graphic, and go over each one. Say, “So how is Bitcoin different from money? Well, for one thing, it’s digital. There is no tangible or touchable part of this money. Also, if you spend a dollar on something, you physically exchange the money for something. You can’t spend that dollar twice. If it’s digital, though, it is a lot easier to make a duplicate and scam people by spending that crypto twice. It’s called the double spend problem. And blockchain technology elimi-nates that issue. Remember how all the ledgers had to agree with each other? That’s only the start. There are other protocols in place to be sure people can’t double spend their cryptocurrencies. And one of the important safeguards is...surprise! People. People called Miners."Miners solve math problems in something called Proof-of-Work to be sure the transac-tions are correct. It takes a LOT of computing power to figure out these problems, to be both fast and accurate. If you are a Bitcoin miner, you have no guarantee you’ll get paid. You have to verify transactions, like we did together. Plus, you also have to solve a math problem. Only the first to find the solution gets paid. If there’s a tie, everyone takes a vote on who should get paid. So a lot of miners pool together, and split their rewards. Activity Three: Proof-of-Work Guessing Game (Need one envelope and one scrap of paper to put the “magic number” on and seal in the envelope.)

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Tell 3 of the 8 people who participated in Activity Two that they are going to be Bitcoin miners. They’ve already verified transactions, from when they made the blockchain, and now they are going to get a chance to get paid! Have an envelope with a low number (like 17) written on a piece of paper and sealed inside. Tell the miners you are thinking of a number from 1 to 100. The first person to guess it without going over, wins. In this case, winning means getting paid 6.25 Bitcoin. [Have STUDENTS use to fig-ure out the cost--at today’s Bitcoin price it would be about $256,000.00!] They can guess as many times as they want, but the guess has to be less than or equal to the number. If a student guesses 18--just tell them “No, keep guessing.” If two guess correctly at the same time, ask the other 5 who are not in the scenario to vote who gets the reward. Now imagine it is millions of miners, and a 16 digit hexadecimal number. So it isn’t that finding these answers is hard, but it is complicated, because the numbers are so big and every-thing is hashed or encrypted. It takes a lot of computing power to get an answer like that from all those people. (This activity is based on a passage in Euny Hong’s article on Investopedia about mining Bitcoin)All that computing power takes a LOT of energy. Bitcoin mining requires cool tempera-tures (because computers throw off a lot of heat and have to be kept cool to keep work-ing), low-cost energy, and high-speed internet. Iceland, Canada, and Russia all have big Bitcoin mining operations. {OPTIONAL: This is what Elon Musk was talking about when he pulled Tesla back from accepting Bitcoin. Do you think he already knew about this issue? It’s not like it’s a secret…. Some people, like Kevin O’Leary of SharkTank fame, want “clean coin” that is mined sustainably [not from coal but from hydroelectricity, for example] and not “blood coin” that is mined in areas where it is illegal to mine it or in countries with hu-man rights abuse issues, like China. These are some issues you may want to think about if you are thinking of buying Bitcoin.]E. How to Purchase CryptoCurrency: Purchasing crypto is pretty straightforward. You need an account at a business/broker-age that sells it, such as eToro, Coinbase, or Robinhood. You have to be 18, or have a cus-todial account with a parent/guardian. You will also need a checking account at a bank to transfer the money to your account at the brokerage. You will use this account to hold your Crypto you buy, unless you move it to your digital wallet. Be aware there are fees for almost every transaction--buying, selling, swapping (trading one type of Crypto for anoth-er). The software will tell you how much the fees are, but you may have to look for it. F. But Should You Purchase Crypto? Cryptocurrency is very volatile. The price moves a lot. So only invest what you can afford to lose, because it can dive steeply as well as climb steeply. Consider the opportunity cost--what else could you do with that money? Cryptocurrency is a category of investment that is SPECULATIVE & RISKY-- it’s risky to SHORT anything, but cryptocurrency’s volatility makes it especially problematic to short. Also, remember that using cryptocurrency for a purchase isn’t actually anonymous. Uncle Sam (okay, the IRS) will tax you as much as pos-sible, so it’s YOUR job to track your transactions, report any profits,and claim any losses on your taxes.*[This is a good stopping point if you are splitting this lesson into two class periods]*G. Memes Beyond Crypto==To the Moon!: Author: Christine Pedersen | Middlesex County Public Schools

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Author: Lauren Shifflett & Laura Sunder-Rao | Elkton Elementary SchoolAuthor: Christine Pedersen | Middlesex County Public SchoolsHave you ever wanted to be a meme? Not make a meme, like at, but actually have a photo you are in or that you took become internet fa-mous? Doge coin actually started out as a joke, and is based on a meme of a Shiba Inu dog that talks in funny and positive phrases.[ Much grow! So money!] The meme Disaster Girl was actually a picture taken by the girl’s dad. But what good did it do her? Until blockchain. Let’s talk about how blockchains make memes better for Bad Luck Brian or Overly Attached Girlfriend.Remember how we said money is uniform? One dollar is like another dollar, and one Bitcoin is like another Bitcoin. But Ether is different. Its blockchain is set up to let you run apps (also known as decentralized apps or “dapps”). It also can make a unit of data that’s stored on a digital ledger into a uniquely identifiable thing. A thing that is identical is called fungible (replaceable, swappable) and if it is identifiably unique it is called non-fungible. So the Etherirum blockchain makes it possible to attach something digital, like the picture of Disaster Girl, on the blockchain as a token that is unique or non-fungible. We call this a non-fungible token, or NFT. And because it is now a thing different from every other thing, it has more value, and it can be owned. Bought and sold. Which is what Disaster Girl and her dad did. For almost $500,000. H. Ownership Changes Everything: As our world becomes more and more digital,the ability to make digital things that can be owned and unique (not just replicated) will become a bigger and bigger part of the re-al-world economy. From Fortnite skins to the Metaverse, the future is going to be a bigger mix of ‘irl’ [in real life] and digital. And blockchain technology is likely to be running under-neath it all. And this is something that is probably going to impact you, pretty directly.The artist Beeple sold some of his digital art for 69 millions dollars at an auction. The art was in the form of an NFT. Beeple has it written into the code that whenever the art is resold, he will get 10% of the sale. STUDENT DISCUSSION: How does creating a contract that can execute itself affect the future of the legal profession? How does it affect the ownership of the art itself? Why is authentication so important in art, and how might this technology change the way artists create?I. Beyond Money: Choose a field, industry, or career that interests you, and research how blockchain tech-nology either currently is or might change jobs in this space. You might want to become a computer scientist or programmer, and work directly with this exciting technology, or you just might want to learn how to use it in your field, but either way, understanding block-chain is a great way to position yourself for a brighter future.J. Take the Short Quiz STUDENTS: Take the quiz to demonstrate your knowledge of the basics of blockchain--and beyond!

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K. Make Your Own CryptoFor a fun extension activity, students can create their own cryptocurrency logos and mot-tos. L. Time to Climb In the NearpodStudents can play a fun competitive game to reinforce their learning.ASSESSMENTS:Students will complete formative assessment activities in the Nearpod, and play the sum-mative assessment game "Time to Climb." They will also take the summative assessment Google form quiz and write a paragraph about the potential future of blockchain technol-ogy in their chosen field.Students were engaged and interested in the lesson, and were able to form opinions about cryptocurrency's suitability as money. The memes were definitely a hit.EXTENSION:When I teach this lesson again, I will have students choose between making their own cryptocurrency or create their own memes using I think they might like the chance to create a meme more than to make their own crypto, and the idea is the same since both would live on the blockchain. I would also move this lesson earlier in the year, because it talks about big ideas and it was fun, so it would help set a good tone.Author: Christine Pedersen | Middlesex County Public SchoolsMiddlesex High SchoolMiddlesex County Public SchoolsChristine Pedersen