ELI5: What is Blockchain
non-tech noob explaining what is blockchain
TLDR
Blockchain is an Excel sheet that is shared by everyone.
The Distributed Ledger
Blockchain is basically an excel sheet, but if it was just an Excel sheet, it would not often be called the next big invention after the internet.
Blockchain is a ledger, similar to the notebook that you use to record your spendings, and the ledger that the bank uses to record the transactions of your bank account. However, both these ledgers are only accessible to one party (ie. you/your bank), imagine these ledgers accessible to everyone globally.
Imagine your notebook of expenses was accessible to everyone, you could not falsify a spending record because everyone has a copy of your notebook and knows your spending history.
Similarly, the Bitcoin blockchain is a record of all the transactions of Bitcoin (ie. whenever someone sent or receive Bitcoin).
This is the essence of blockchain, a shared ledger that keeps transparent transactions so there cannot be a single actor who can manipulate the record.
This is why blockchain is also called the Distributed/Decentralised Ledger.
Literally “Block-Chain”
Blockchain is literally a chain of blocks. Transaction data is stored in blocks and these blocks are linked together to form a chain.
Instead of block #1, block #2, the blocks are organised in sequence within the chain using a unique digital fingerprint called “Hash” to identify each block.
Where is Blockchain? Can we see it?
A blockchain is stored on numerous computers hosted by people all over the world, these computers are called nodes.
Each node has a copy of the entire blockchain, from the first block to the latest block. If one computer is down, there is always another computer, ensuring the network’s resilience. The security of the network increases with the number of nodes.
There are public and private blockchains. Public blockchains like Ethereum allow anyone to view transactions using blockchain explorers like Etherscan.(https://etherscan.io/)
Important Properties of Blockchain
1. Decentralised
This is the most distinctive feature of blockchain, which is made possible due to its design and principles of how it works.
As mentioned, each node on the network has a copy of the entire ledger. This means that no single entity controls the ledger. Instead, it is collectively managed by all participants.
Blockchain operates on a peer-to-peer (P2P) network, where nodes interact directly with each other without the need for intermediaries. This P2P architecture is fundamental to the decentralised nature of blockchain, as it allows for direct transaction and information sharing between parties.
2. Immutable
Once a transaction is recorded on the blockchain, it cannot be modified or deleted, making transactions irreversible and the blockchain permanent and immutable.
This property is crucial for the trust and security that blockchain provides.
3. Trustless
New data is automatically and periodically added to the blockchain through attaching a newly created block to the chain. This allows transfer of value without trusting a middleman, making the system trustless.
4. Transparent
Blockchain is transparent and auditable. Anyone can view live transactions, trace historical transactions, and verify the authenticity.
Final Thoughts
Blockchain is an innovative and significant technology advancement that can potentially revolutionise the financial sector and the way data is managed across various industries.
It’s decentralised, immutable, trustless, and transparent nature makes it an ideal platform for recording transactions and storing data in a verifiable and permanent way.
As blockchain continues to evolve, it’s poised to become a fundamental part of many industries, offering solutions that are more secure, efficient, and equitable than traditional centralised systems.
neko x
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