Blockchain — A Non Technical Explanation
Few weeks back my friend asked me ‘How a blockchain concept can be explained to a non-technical audience effectively?’
Here is my attempt at it,
Let’s understand what problem blockchain tries to solve. The fundamental problem it tries to solve is of ‘Trust’. Let’s take an example.
Suppose we would like to build a system for effective verification and the centralized repository of the educational certificates, degrees and diploma’s. Traditionally such system can be built by server client model with some central authority.
For example, a company in Silicon Valley develops a web application and hosts it. Now, users can upload the scanned copies of the degrees / certificates and university / organization awarding the degree, can verify it by using the same platform. But an organization in other part of the world may not trust this company and may still go for the independent verification of the degrees.
Now lets see how blockchain can help to solve this problem.
What is a blockchain ?
A blockchain can be viewed as ‘Distributed Ledger’. The term ‘ledger’ is usually used with respect to a data structure maintaining financial transactions. But in terms of a blockchain ,’a transaction’ can have a broader meaning. ‘A university awarding a degree to a student’ can be a transaction and can be recorded in a blockchain.
A blockchain is called as a distributed ledger, because there is no central authority (For example, a silicon valley company) who maintains and owns the ledger. A blockchain network is nothing but a interconnected group of computers. In case of our scenario, hosts will be universities, students and any entity who would like to verify a degree — say an employer of a student.
Every computer, sometimes also called as host (a special client software on those computers), participating in the blockchain network will have a copy of the ledger and can verify the authenticity and consistency of it independently.
Following properties of the blockchain help to solve our problem,
- There is not central governing authority which maintains and controls the ledger
- Hosts will have a full copy of the ledger
- Hosts can independently verify the authenticity and the consistency of the ledger
- Once a transaction is added to blockchain and accepted by the network as legitimate transaction (called as ‘consensus’), it cannot be tempered with.
- In nutshell, blockchain is immutable distributed ledger.
Now, lets try to understand the problem of trust in more detail.
We encounter the issue of trust in context of digital systems every day. In our day to day life, we trust the central authorities, such as banks, for following,
Trust of Safety — Trust that bank does not temper with our account by randomly subtracting money. In case of above example, trust that silicon valley company does not randomly remove approved degrees from a student account
Trust of Issuance — Trust that the silicon valley company does not award degrees directly to its employees on the behalf of an university
Trust of Correctness — Trust that a correct degree has been awarded to a correct student.
So the goal of a blockchain based system is to achieve these trusts in a ‘Trust-less Environment’. Means, there is no central authority. What we have is a bunch of hosts participating in the blockchain network ( Called as ‘Distributed System’, Other example being, popular bittorrent — a pier to pier information exchange system ) and no host trusts another.
Now lets see how blockchain combined with digital certificates can solves this problem of trust,
1. Trust of Safety — If network accepts only transaction which are digitally certified trust of safety is achieved. For example, when a student completes all the requirements of a degree or a certificate, apart from physically awarding the degree to a student, an university can add a digitally certified transaction (a degree transfer record) to a public blockchain . Digital certificate can establish the identities of university and student.
2. Trust of Issuance and Trust of Correctness — The facts,
- In blockchain network distributed ledger is available for each node for verification and
- The blockchain can not be tempered with
will achieve these trusts. For example, any malicious host may try to add transaction to temper with the awarded degree which will be rejected by the network and will not be a part of the blockchain. (How this is done is fairly technical and beyond the scope if this article)
So to summaries, blockchain tries to solve the problem of trust by publicly available immutable consistent distributed ledger.
