Blockchain for Dummies in 4 minutes
Blockchain. Blockchain. Blockchain everywhere. It’s funny how a simple chain of blocks has managed to take the entire world by storm.
But the question is: is it really just a chain of blocks?
The short answer is, yes. It is just a chain of blocks that is secure, decentralized, transparent, and immutable — all at once.
But we all know that it is also far more complicated than that, so sit back as we try to demystify blockchain.
Understanding the Basics
To fully get a grasp of how blockchain works, we need to understand the underlying structure of blockchain which is deeply rooted in two things: hash and pointers — and no, not that hash.
Hash
To understand the concept of a hash, let’s assume you have a sentence “I am the best” (because, obviously you are) and you put this sentence through an algorithm called a hash function. Then, you will receive a unique digital output known as its hash value.
For the purpose of understanding blockchain, also remember that no matter how many times you run the hash function on the same digital media, the same hash will be returned. However, if even a single letter is changed for e.g “I am the Best”, the hash will be completely different to the original one.
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It is also important to remember that the hash function is a one-way function i.e so, for the sentence ‘I am the best’, you can derive a hash value for it, but there is no way for you to derive the sentence or digital media from a hash value.
Pointers
A pointer, in simple technical terms, points to a memory address where you have some data stored. Data could be any digital media in the form of an integer, or a string of characters or a file. In non CS terms, it’s simply like you are pointing to the location where your friend is standing.
One of the essential uses of pointers is in the data structure called a linked list. A linked list is a series of blocks containing data, with each block connected to the next by a pointer. This means, each block also stores the address to the next block and is hence able to form a chain of blocks pointing to the next block in the sequence.
If you’re finding it difficult to imagine, think about this assassination chain — you pointing to your friend, Amy. Amy pointing to another friend, Sam, Sam pointing to Feza and so on.
Is blockchain simply a linked list?
Yes, however, to add all that revolutionary features, blockchain has one very subtle change.
It does not simply have pointers — but rather it has hash pointers
A hash pointer, as the name suggests, does not just have the address of the previous block but also the hash value of the previous block.
How does storing hash values make blockchain all powerful?
For starters, we know each block in a block chain has multiple transactions and for each block, based on its data, a hash value is computed (as discussed above) and is stored in the next block.
Now what happens if you try to change even a bit in any of the transactions or blocks, let’s say Block 0?
Based on the properties of the hash function, even the slightest modifications will change the hash value of Block 0. Simple comparison between the previous hash value stored in Block 1 and this hash value will help us know that the block has been tampered with.
But lets say, you were smart enough to change the hash pointer stored in the previous block(Block 1) too?
Well bad news for you, you will still be caught.
Because changing the hash pointer in the Block 1 resulted in a change in its data and subsequently its hash value This results in a domino effect where the hash value then changes in its previous block (Block 2) and so on.
All this simply means that transactions once added to the block are immutable and hence, secure.
There is obviously a lot more..
Blockchain technology is also the very definition of a democratic system because it has no central authority like a bank or the government. Simply put, it is a shared and immutable ledger that is managed by a network of nodes that can be viewed by all participating bodies at any time.
There is definitely a lot more when it comes to Blockchain applications as well as concerns, and also in the context of making a Blockchain secure, decentralized and transparent — like consensus, Merkel trees, and proof of work in a blockchain — but let’s keep that for a later time.
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