Beginner Explains Blockchain: Basics

Blockchain made easy by someone who didn’t get it either!

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Every time you go grocery shopping and stock up on everything yummy & nutritious, you get back and arrange them into the cabinets and shelves in your kitchen.

You start from one end, fill in shelf by shelf, cabinet by cabinet. How satisfying right?

But does it stay that way?

Ah, give it a week and everything will be all over the place, the turmeric next to biscuits and pasta next to the aluminium foil.

What if I told you that there was a way you could prevent this? A way in which all these shelves and cabinets are linked and each family member is aware of what is supposed to be where. And any time that one naughty sibling carelessly tries to put the oreos next to the saucepans, not only do the cabinets not approve it, but each of you is alerted and he is forced to place it correctly.

Well, that’s kind of the principle a blockchain works on.

A blockchain is essentially a database. A place where data is stored. Digital data. (Digital groceries in digital cabinets, if I may ;) )

A blockchain is exactly what it sounds like. A chain of blocks.

Each of these blocks is essentially a group of information that has come together to form a group that is termed a ‘block’.

Just like how a bunch of water molecules come together to form a glass of water. Every glass has a capacity limit. Once the limit is crossed, the water must be poured into another glass.

In the same way, each block can contain only certain amount of data, after which, the new data must come together to form a brand new block.

These blocks are linked linearly, i.e. in a straight line with one another. These blocks of data are not stored in one place, but on an entire network of computer systems, that can be spread across the world.

No one organisation, individual or company has control over a blockchain. Ownership is held equally by every member of the network.

Kind of like how, no one entity owns a democracy, but is rather owned as much by every citizen in it. Nothing happens in the democracy without a majority agreement.

Each block has a limit on how much data can be stored on it. Once the data is stored, the block generates a unique fingerprint-like code known as a ‘hash’. It helps identify the block. It is linked to the data the block holds and changes if the data is changed.

A block in a blockchain contains 3 main elements:

• Hash: A unique code identifying the block
• Hash of previous block: The unique code identifying the previous block
• Data: The information that came together to form the block

The basic reason why blockchain is so widely appreciated is due to its level of privacy & security. This goes back to the democracy example I gave earlier.

A blockchain is democratic or ‘decentralised’ and since no one entity has control over it, it is difficult to alter the data in a blockchain.

When data is altered in one block, the hash of that block changes. This hash no longer corresponds to the “hash of previous block” in the block right after it.

Other systems on the network can identify that someone has tried to alter the data. Unless more than 50% of the others on the network agree to this change, it is denied. Thus, making it secure and the data difficult to change.

This was a basic idea on how a blockchain works conceptually.

Was it simpler to understand? What questions do you have? Write below!