A SIMPLE GUIDE

Blockchain Technology Explained

+ how it relates to Bitcoin. Written from a completely non-technical perspective.

Renee Yang
Jul 23, 2019 · 4 min read

Defining Blockchain Technology

So at its core, blockchain technology is a record-keeping tool.

This network of computers all manage the blockchain together without hierarchy (refer to header image). With such a flat architecture, blockchain networks are often referred to as peer-to-peer networks.

First, these computers verify all transactions one by one and add them onto a ‘block’ of information. Then these blocks are added to the blockchain and downloaded onto each computer. In a nutshell, this is how these computers keep the blockchain secure and running.

TL:DRa blockchain is a digital ledger of transactions that is managed and owned by a peer-to-peer network of computers.

Breaking it down

‘Block’

‘Chain’

All transactions need to be verified before they are added onto the blockchain. This is done through a consensus mechanism, which allows all the nodes on the network to agree on things without an authority. This is how blockchains stay autonomous and decentralized.

For an in-depth, but still easy-to-understand explanation of blockchain technology, this is a great guide:

What makes blockchain technology unique?

  • Transparent: Transactions on a blockchain are constantly being recorded and stored on the blockchain across nodes. This means that all participants can view all transactions on the network in real-time.
  • Immutable: Blockchains are designed to enable permanent record keeping so that stored data cannot be altered after being added. This makes it an extremely stable and reliable record-keeping system.
  • Secure: It is hard to change or destroy blockchains because of its distributed nature. For example, if someone hacked into one of the computers on the network and altered information there, the network would remain unaffected.

How does Bitcoin fit into all this?

Before Bitcoin, the only way people could exchange money digitally was through a bank, exchange or online service. These are all examples of 3rd parties that control our information, money and transaction records.

To solve this problem, Satoshi described the use of blocks connected in a chain that was chronological and permanent. This solved the double-spend problem and allowed people to exchange money knowing their transactions were secure and irreversible. This became what we now know as blockchain technology.

As the first cryptocurrency, Bitcoin spurred the creation of other cryptocurrencies that are all attempting to solve specific problems. For example, Monero was created to provide a completely anonymous network (bitcoin is only pseudonymous). Ether was created to power an open-source platform for decentralized applications. And Dash was created to allow for quicker digital transactions.

Blockchain applications

The bigger question is whether we need to remove current 3rd parties from these transactions. The truth is, blockchain technology is not a solution for everything, so it’s important to weight the pros and cons of using it.

I explore this issue in more detail here:

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Renee Yang

Written by

Sharing as I learn about blockchain, beauty and wellness.

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

Renee Yang

Written by

Sharing as I learn about blockchain, beauty and wellness.

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

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