Get to grips with the basics of the technology and why we believe it can change future outcomes.
A Distributed Peer to Peer Network
As with any new technology there is the initial knowledge hurdle and basic understanding required before any advanced thought can be placed into the idea. For certain members of society the idea of a blockchain is a simple one having spent years of their lives working in technology industries such as IT, web development, coding, app development etc.
For the majority of the world these ideas are foreign and so we have to start at the beginning and take it slow in order for you to get excited about blockchain, first you have to understand what it is!
The dictionary definition of a blockchain does little to elaborate for most of us, but lets try:
A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
Usually this explanation only leads to more questions so let’s start at the beginning and dissect this definition.
You probably already interact with a decentralised network!
A ledger is a record of transactions like those kept by a retail shop on how many products they have sold in that week for example. A digital ledger is just a digitised version of the original paper, handwritten version once used. The idea of a ledger is that it should be updated continually and kept up to date and in today’s current system, digital ledgers are updated centrally, i.e one person/organisation is responsible for maintaining the ledger.
Think about PayPal as an organisation. What do they actually do? They take money you send to them and send it to someone else, and take a % for safely handling your money. Paypal keeps a record or ledger of all the transactions, the ledger is centralised and only paypal has access to that.
Organisations such as PayPal have spent, and are still spending, millions of dollars convincing all of us that they can be trusted to handle our money and that by using them to send money you are safer. An idea that’s tricky to agree with once you understand that only PayPal have access to all the records.
Transactions made in bitcoin or another cryptocurrency
Just like when you send and receive traditional money through PayPal and a record is kept, when a transaction occurs using cryptocurrency a record or ledger has to be kept of those transactions.
The blockchain is a new way to record that information where the information is encoded by the sender and then verified by the new owner using cryptography BUT the information on the record is also checked by all the other nodes in the network. A node is simply – a point in a network or diagram at which lines or pathways intersect or branch.
So hopefully it’s a bit clearer now that the blockchain doesn’t need a ‘trusted’ organisation or person to handle or record the transaction as its passing through all the nodes that MUST 100% agree that what was sent is what has been received. This can be checked by all the nodes using the code created and once all the nodes agree then the transaction takes place and the details are added to a block and all the ledgers in the chain are automatically updated to reflect the transaction.
The increased transaction integrity comes as until all the nodes are in agreement then the ledger wont change, and likewise the ledger is almost impossible to alter or corrupt as all the ledgers would have to be altered as a pose to just one ledger as is the case with 3rd parties such as PayPal.
Recorded chronologically and publicly
The first part of this is fairly straightforward with all the transactions being recorded chronologically or in other words as they occur in real time by time and date. `the second part is what is most interesting about the blockchain system. The information is stored publically and can be viewed by both the buyer and seller and anyone else wanting to view the transactions.
The public aspect of the storage is interesting as it can allow information to be shared instantly and updated universally. So imagine for one second that all your medical data was stored on a worldwide digital ledger that was accessible by any medical facility on earth, all your up to date records are there to be seen and read by the person about to possibly perform