Blockchain Simplified
Not Another Blockchain Lecture!?!
Well, it’s actually that…
Welcome! Do me a favour and answer these questions.
1. Do you find yourself stuck in a conversation about blockchain and cryptography without any input or idea?
2. Do you want to learn more about cryptography but are overwhelmed by the amount of content on the internet? OR
3. Do you not have any interest and stumbled upon this article and know where this is going?
If you find yourself raising your hand to any of these questions, then you my friend are at the right place (somewhat). My name is Simran Ghera and my job through this series of blogs would be to make Cryptography and Blockchain technology easy to digest and understand. Hopefully, by the end of the series, you would be equipped with enough material to ask your Blockchain-related questions from someone else.
The start of it all
Going back into history for the housing crisis of 2008 which substantially affected the financial markets around the globe, and not for the better. Not only did investors lose their money, but economies like Japan, China etc. also suffered a considerable fall in their GDPs. Financial markets came tumbling down followed by the great fall of Lehman Brothers. It was then an anonymous entity by the name of Satoshi Nakamoto that came up with an idea, set to change the course of crypto exchange as we know it. They published an in-depth report on a topic called, “Bitcoin? A Peer-to-Peer Electronic Cash System.”
Their paper put forth how a peer-to-peer system based on a cryptographic signature on a decentralized network, effectively solves issues posed by a centralized system that is based on trust within multiple intermediaries. This trust not only increases transaction costs but also increases the risk for non-reversible transactions. To properly understand this, we have to first get into what decentralization means for an economy.
What is decentralization?
Just as the name suggests, decentralization effectively shifts the power from centralized institutions to decentralized sectors in a network. People involved in the exchange work on a peer-to-peer network without any need for financial intermediaries such as banks. Bitcoin is a prime example of one such system which functions without any centralized authorities, efficiently exchanging value between two users by set guidelines.
A decentralized system works on multiple nodes (something we will dive into later), which makes it default-free to a large extent, as even if 10 out of 200 nodes fail, 190 of them would still be functioning around the network to ensure smooth running. Not only this, but it also eliminates the risk of multiple entities studying our money spending and tracking habits and using them for their benefit, by taking out the need for any central institution and only involving entities that are being directly affected by the exchange. Which is a huge win for privacy in my opinion.
There you go. A brief and simplified introduction to Blockchain and bitcoin. Hope you had fun reading it but if you didn’t or have any questions, leave them down in the comments and I would be glad to sort them out for you. You can also connect with me on LinkedIn for a casual chat on the wonder that is Blockchain. Next up we have what are the functions of a digital ledger on a distributed network. See you then!
