Learn English – Could have Usage ( did it or didn’t do it )

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I know I could have done it much better but sometimes there are no second chances.
I have had many chances where I could have done something really cool but didn't do it because I was too scared.

This is the explanation I got:
The phrase "could have" is used to mean that somebody was capable of doing something, but he actually didn't do it.

Please read the below line:

The best thing I could have done was what I did
or
I did the best thing that I could have done

Here, I want to understand what is mean by "could have".
1. Does it mean the person was capable of doing it but actually didn't do it.
2. Does it mean the person was capable of doing it and actually did it.
3. Does it mean the person was capable of doing it but it doesn't matter whether he did it or he didn't do it.

I think the 3rd option is correct.

Best Answer

The past irrealis could have done is not always a "counterfactual"—a thing which did not happen—it can be a "hypothetical", too, a thing which was possible but not yet done at the past time you're talking about.

In this case could have done appears in a relative clause modifying the best thing. It is legitimately cast as an irrealis because it refers implicitly not to the specific thing I did but to the range of hypothetical options which lay before me at that time.

Of all the things which I could have done, the best was the thing I actually did.

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