Blockchain Boiled Down

An intro to blockchain

Published in

The Startup

5 min readSep 17, 2019

When you hear Bitcoin, you might think of people turning spare change into millions of dollars and that guy that screams Bitconnect, but forget about all that. Let’s talk about the underlying technology behind bitcoin and get a basic understanding of how it works without going crazy technical.

What is Blockchain?

Blockchain is a type of decentralized network which allows for the storage of immutable information in a linked and distributed chain. What makes it different from a regular network?

It’s decentralized, this means no one entity has control and can censor it.
It’s immutable, once information is added to the chain it can’t be changed.
It’s distributed and transparent, every node on the network has a copy of the chain.
It’s secure, costs a lot of time and money to hack

How does it work?

Picture a 3d Block. One of the faces of the block has a number on it; this is its block number. The other face has a number that references the previous block’s number. These numbers link the blocks almost like a chain. Each block stores some sort of Data. If someone were to change the data inside the block the number on the faces would change, and thus none of the following blocks would be connected. Each block number is unique to its block. The first block is called the Genisis Block.

We call these numbers hashes, but in reality, they’re a lot more complex. They are cryptographically encrypted using a hash function called SHA-256(secure hashing algorithm). The function takes in the data in a block for example “doggo” and spits out something scary looking like this: 8AA89C66E2C453B71400AC832A345D872C33147150267BE5402552EE19B3D4CE

Going back to the immutability, here’s what happens when we change a single letter or space in the input, e.g. “doggo →dogg” the out would be completely different:298C0A49EA75EF9B5737B01A997999E9A16A9ABC000E4F4FF0AD1201ADBDC4FA

Generally speaking, a block contains: a timestamp of when it was generated, it’s hash, the hash of the previous hash and some form of data inside.

Now how is it decentralized?

Most databases are stored in a centralized network, where one entity is in charge. The problem with this structure is that if someone tries to hack the network, it would only require one point of failure. Having a central power can also lead to censorship and unfair control.

Instead, blockchains adopt a decentralized Peer to Peer structure, every node on the network has a copy of the chain. The copies are distributed.

How does a Block get added to the chain?

Nodes(computers) on the network called Miners compete to solve a cryptographic puzzle. Whichever miner solves the problem first then broadcasts it to the network and is awarded the blockchain’s cryptocurrency (in Bitcoins cases bitcoin). The puzzle is hard to figure out, but the solution is easy to verify.

The nodes on the network then check if the block is uncorrupted using the solution. If 51% of nodes come to a consensus that it is valid, the block becomes apart of the chain. This process is called proof of work. However, it’s makes mining inefficient as it is computationally heavy it requires a lot of time, money and energy. An alternative process is called proof of stake.

What are the types of Chains?

Depending on the information that is stored or the people using it, certain types of chains may be better than others. Such as a Public chain as the name suggests it’s accessible and open to everyone to view (such as Bitcoin and Ethereurm). Others can be Private; more exclusive for an organization this may be suitable for governments, companies or banks. Hybrid chains are a mix of both where the public can view the data, but their scope is limited, while selected individuals are able to see all the data. Consortium chains require nodes to be invited to take part, essentially shared permissions.

What if I wanted to hack the network?

You can, but…

you would need to control 51% of the hashing power. If you tampered with a single block, it would change its hash, but the hashes of the following blocks would still include their links to the original block. Thus you would then have to change all the hashes of the blocks after it. Actually mining and solving the proof of work is very unlikely. On the bitcoin network, your odds are 1 in 7,898,451 every 10 minutes(Bitcoin creates a 10 min time gap for security)

Therefore it’s costly, time-consuming and economically speaking not worth it; you would lose a lot more than you could possibly earn. In this sense, Blockchains are secure and unhackable.

*blockchains have been hacked in the past, but for other reasons

Okay, but how can we use blockchains?

The applications of blockchain technology are only limited to the imagination.

They can remove middlemen and third parties in numerous fields, streamline processes, increase transparency, reduce costs, improve privacy and create trust. Heres some legit use cases:

I would caution though that there’s a lot of unnecessary bs applications of blockchain, so here’s a checklist to see if something actually benefits from one