Explain Like I’m Five: Blockchain pt.1
A series on making complicated things accessible
Chances are, you’ve heard the word blockchain before. Whether it was on the news, at a dinner party, or from the crazy passionate techie in your life. Either way, most have heard of it, but not many understand what it means.
If you’ve looked into blockchain technology and kind of…sort of…definitely didn’t understand the concept, this one’s for you. Blockchain technology is multi-faceted, complicated, and nuanced at best. But there’s a reason for this, which we’ll get to in this post and in part two.
Part one of this article is to help you grasp the main features that make up a blockchain. In part two, I’ll discuss why blockchain is a safer way to store data and discuss some of its use cases.
The History of Blockchain
Before diving in, let’s briefly review the history.
The concept of blockchain technology has been around longer than you might think. The first use case was introduced by two researchers, Stuart Haber and W. Scott Stornetta, in 1991, where they wanted to find a system in which timestamps on documents could not be altered.
However, it wasn’t until early 2009, when Bitcoin launched, that blockchain technology had its first real use case.
Bitcoin on its own grew in magnitude far more than many of us would have predicted. So to keep things simple, I will only discuss the basics of blockchain technology in this post without getting into bitcoin.
The Foundation of Blockchain Technology
Blockchain technology is a means of safely storing information. Think of it as an online ledger or database. Blockchain, as the name suggests, consists of blocks of data that are chained together.
Each block has three components: a unique identifier, encrypted data, and a reference number. Let’s break this down.
Unique Identifier
A block’s unique identifier (known as a hash) is similar to a fingerprint; no two blocks can ever have the same hash.
The hash gets assigned to the block only once a block has stored the data and is ready to join the chain.
In the event that someone tries to tamper with the data once it has been added to the blockchain, the hash automatically changes. This is an important safeguarding mechanism of blockchain technology.
Data
Data that is stored on a block is encrypted and anonymized.
Blockchain technology is not considered confidential; however, the data is anonymized and cannot be traced to a certain individual.
Reference
Finally, each block also contains a reference number. The reference is always the hash of the previous block on the chain. This essentially acts as the ‘chain’ between the blocks.
If the reference and the previous block’s hash do not match, the block will not be accepted and will not be added to the blockchain.
Now that we know what each block consists of, let’s look into what happens once a block has the encrypted data and joins the chain.
For starters, once a block has been added to the chain, the data cannot be changed; making the blocks immutable.
The blocks also hold the data in order. This means that a new block is always added to the end of the chain and data is always ordered from oldest to newest, ensuring the data is tracked chronologically.
That’s it; everything you need to know to understand what a blockchain is and how it works.
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