BLOCKCHAIN — SIMPLE EXPLANATION
When I shared with a couple of friends on my recent interest of Blockchain Technology, most of them are still struggling with it and give me the expression of :”What the hell is this?” or “It seems so complicated to understand”. I believed many readers here are also having the same ?? in their head.
So, I will try my very best to explain what is Blockchain Technology as simply as possible. OK, maybe let’s start with the term : BLOCKCHAIN. As you can see, the term comprises of two words : BLOCK and CHAIN. If we dissect it further, it all make perfect sense.
Here we go..
All data/transaction in Blockchain is stored in block and distributed across multiple networks (or nodes) which can be housed in different location or even country.
All blocks are linked together (through hash pointer), one after the other to formed a continuous and unbroken chain.
Following is the simplistic view of a blockchain (source : internet):
All blockchains are made available in all networks(nodes) and all networks (nodes) need to perform some algorithms to agree/validate that chains are valid. This is to ensure integrity of the data.
Of course, this is only the simplistic view of how the technology work, of which, most of the time it’s transparent to the users. Just like internet, do you really care how the internet work (the TCP/IP)?
As a user, I believed it is more important to know what value or benefit this revolutionary technology can bring to us? Here are some of key reasons why Blockchain Technology is revolutionary:
1. The database is encrypted and decentralized, it is often refers to as distributed ledger. This feature makes it more secured and almost impossible to hack (as opposed to the current centralized system).
2. The data/transaction is immutable i.e. cannot be deleted/amended. It ensure data integrity and encourage trust among the users.
3. It makes a true peer-to-peer transaction possible (i.e. without a third party e.g. Paypal or bank for the money transfer). By the way, Blockchain technology is not only applicable to Cryptocurrency, it can be used for any type of digital asset.
I hope this post provides you with a better picture of Blockchain Technology.
Please feel free to comment, if any.
Note : I’ve intentionally excluded other more technical aspect of Blockchain Technology like Mining, Proof Of Work (POW) etc.. from the above explanation to avoid confusion.