What is blockchain? An explanation your Grandmother will understand.
A blockchain is like a blank piece of paper. You can use it to write laws, books, take notes on any subject matter, draw something, vote, or even turn it into a dollar bill that trades for goods and services. Like a blank piece of paper, there is a world of possibility with blockchain technology, but what is it?
Think back to when you were in school. Do you remember kids passing notes around class? Imagine starting a class where no one knows each other. A student in the front wants to ask a student in the back a question but doesn’t want to disturb the teacher. So, she writes her question and draws something on a blank piece of paper. She then asks the person next to her to pass it back. Every student can read the note as it is passed back, but they don’t know the name of the person who wrote the note nor the person in the back. Imagine that each student in the class decides to write a note to someone else in the class using the same piece of paper. Now in this scenario, every time someone writes a new message, they have to run to a copy machine and make copies to hand to everyone in the class before passing it to the next person, who then does the same thing. This cycle repeats itself until everyone in the room has written a message and everyone has an exact copy of the paper being passed around.
Now, what happens if the teacher takes a copy of the note away from one student and throws it out? It is not a problem because one of the student’s new friends will just make another copy and give it to them. What happens if someone crosses out or tries to change a message on the note? Any of the students can ask someone else in the class to make a copy of their note and throw away the modified one. The only way that the message can be modified is if everyone or a majority of the people in the class agree to the modifications. We call this consensus. If this cycle were to repeat itself extending to other classrooms, schools, neighborhoods, colleges, etc., then it would be practically impossible to cross out a message on every single copy of the note. In this analogy, as long as someone has a copy of the note, the message will always be there. Hence, blockchains create immutability.
Further translating this analogy to blockchain jargon, each of these students would be called a node. The fact that everyone can read the message as it passes around the class is why we say blockchain offers transparency. In a very simplistic way, this analogy represents blockchain technology.
Please note there are numerous types of blockchains. Methods on how something is written to a blockchain can differ significantly between types. To truly understand the technology we would have to discuss all the different components more in depth.
One should also consider how blockchain is used. While paper can be used to build a house (i.e. paper mache), is it really the best material to use? Although blockchain technology has an enormous number applications we must ask the same question, is blockchain really the best tool for the proposed use or is there something better.
For now, I hope the principles demonstrated through this simple analogy above gives you a better understanding of blockchain and can aid as you delve further into learning about the technology.