Blockchain: Explained like you are five

The technology of the future is in our hands today.

Aditya Prakash
Oct 30, 2019 · 6 min read

A blockchain is essentially an ever-growing list of records(called blocks) that are linked using cryptography. In simple terms, it is a ledger. As the name suggests, it is a series of blocks that are grouped or rather, “chained” together.

I would like to clear a common misconception at the beginning itself. Blockchain is NOT A CRYPTOCURRENCY and it is definitely not bitcoin!!

Let us clear it up here. Foremost, blockchain is a technology, and bitcoin has been the first to successfully implement it. It is simply, a ledger which can be programmed to record not just financial transactions, but virtually anything. What separates Blockchain from others is that it does not require a central authority for any sort of validation, making it faster than other models. Even though we can trace its origin to the 90s, blockchain’s popularity was boosted after the success of Bitcoin.

How does Blockchain work?

The blockchain can be divided into 4 major parts:

A hash function is a program that converts the input into a series of letters and numbers. The input can have any number of digits, however, the hash string will always have a fixed number of elements. Even the smallest change in this string creates a new hash. Now, in our ledger, each entry corresponds to a particular hash. Moreover, each hash entry is dependent on the previous hash.

In simple words, a Nonce is just like your One-Time Password or OTP. It is a single-use code in cryptography. A nonce is extremely difficult to forge. Let alone a human, even computers cannot figure out the nonce in a limited time frame.

As mentioned earlier, a blockchain system is lacking in a central authority. In such a case, we employ a number of “sub-systems” or nodes to do the task for us. Nodes are just computer systems each of whom maintains its own version of the spreadsheet or ledger. Consider the below example:

This is Person A, with 500 coins in his wallet.

Person A is friends with B and C. All three of them are really close friends and regularly borrow and lend coins among each other. Person A had lent 300 coins to person B a couple of weeks back, and he himself had taken 700 coins from person C. Now, C is short on money and asks for those 700 coins back, but our good guy here has only 500!! In this case, he decides to call up B to return his 300 coins so that he can pay C. B agrees to do so and transfers his 300 coins to A. After this, A immediately transfers 700 coins to C. Sounds simple, right?

Now here’s the real dilemma. The transfer of data takes time, and we have our node servers all over the world, and there’s data loss as well! Suppose a particular node X in a remote corner of the world could not receive the data for the transaction that B did, but instead got the one with A and C. The node in question would think that something is wrong since A has only 500 coins with him and cannot give 700 and label poor A has fraud!

He just wanted to return the money!!!!!

Transactions can get really messy due to their fast pace. Some nodes will take a particular transaction as valid, while others may think it is fraudulent. This is solved by voting on a particular transaction. For the sake of it, we will assume most nodes got the transaction by B first, and A’s name will be cleared!!

Of course, use of node also eliminates the possibility of a person manipulating the ledgers because the other nodes will vote on it and reject the change. Sorry guys, you cannot get infinite money just because you happen to have a node on your computer. To quote Emperor Palpatine:

The singular element of the blockchain is termed block. Transaction data is permanently recorded in files called blocks. They can be thought of as the individual pages of a city recorder’s recordbook (where changes to title to real estate are recorded) or a stock transaction ledger. Once a certain number of transactions have been recorded in a block, that block is archived and a new one is formed. Thus, it is impossible to manipulate it. You may still add data to it, but changing a previous data is just not possible.

Where can we employ blockchain?

Blockchain is already being used in bitcoin. It was the first successful actualisation of the technology, but the scope of blockchain is not limited to financial transactions. We can certainly find novel solutions to common problems faced by the people using blockchain. For instance:

In India, land disputes are really common. People use money and muscle power to manipulate the land owned by them, illegally encroaching on some else’s property. Or, the recordkeeper just makes a mistake while writing down some figures on the notebook. There are many more ways by which these records are changed and I would not like to go deeper into those. Back to the topic.

In a public blockchain like bitcoin, all participants are allowed to create or modify the blockchain, while in a private blockchain, like what has been envisioned for land records, only select participants are given that responsibility. New information is chained to the old entry, ensuring that a trail of changes to a record is established since its creation. There is no need for a central authority to keep records as they are distributed across a system of networked computer nodes. All participants can see and use the latest version of the record without relying on anyone else. In short, data stored using blockchain is secure, transparent, easy to access, and hard to dispute.

Our next problem is to transition legacy records. Before we even begin with the transfer, one must first ensure the starting data is absolutely correct and indisputable. A possible method of seeing this through is to start keeping records of the land owned by recognised authorities, such as state and central governments. Next step would be to include mortgaged land and systematically proceeding further ahead.

Real estate information is currently centralized and prone to manipulation between stakeholders. This increases the possibility of inefficient and potentially inaccurate sharing of information. A decentralized and open property market blockchain database where information is published by the public rather than a central body provides transparency around the validity of property data.

Insurance sector can also be hugely benefitted by this. Believe me when I say fraud is a huge issue here. When claims, payments and other documentation are recorded and stored in unchangeable ways, lots of fraud can be eliminated, with savings for both companies and consumers.


To sum it up, blockchain is a technology which makes life for scammers and fraudsters difficult. With several nodes maintaining the same ledger, it is impossible to manipulate them all. Forgery of data is just not possible since everything is encrypted. The use of hashes and nonces are the cherry on the top. All-in-all, blockchain is going to make life easier for all of us. Eventually. :-)

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Aditya Prakash

Written by

Studying Computer Engineering at Institute of Engineering and Technology, Indore (2019-Present) | Github: AdityaPrakash-26 | Email:

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +794K followers.

Aditya Prakash

Written by

Studying Computer Engineering at Institute of Engineering and Technology, Indore (2019-Present) | Github: AdityaPrakash-26 | Email:

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +794K followers.

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