Blockchain – you can read and listen about it all the time and almost anywhere – just that mostly it is all very technical and if you are not somehow in the subject, you might fail to understand the basics already. It`s like trying to explain the internet to a person who doesn’t know the meaning of “website”, “server” and “online”. Trying to make things simple, let us focus here only on the definition of blockchain, not even the idea behind it or else.
What is blockchain?
Starting with a once sentence definition:
“Blockchain is basically a decentralized database, recording transactions between different parties, free of corruption and manipulation.”
Now let’s break down this sentence into easy-bite pieces.
In a wider sense, you can imagine blockchain as being similar to the traditional book-keeping or like a giant excel database. Just that it is not stored in a single book, on one computer or a single server. The blockchain data is diversified on computers all over the globe and every single participant has access to it.
There is no owner or administrator who can decide what is correct and what is wrong.
The Blockchain is recording any kind of information that fits into the given limits and that is not limited to financial transactions only. Giving an analogy of what is happening. Imagine I would actually film how I transact five Dollars from my hand to another person’s hand, doing this in front of witnesses. Then uploading the movie to any open video portal sharing it with the world. Each further “transaction” will be added in the form of another video. So, any participant will know about the transaction, even those who haven’t witnessed it live.
Between different parties
Every single participant represents a party and it is possible to do a transaction directly from one to another party. There is no third party executing it for you, there is nobody taking a fee for the transaction. So other than for instance a bank doing a transaction as a service between two parties and charging money for it, the users deal directly with each other.
Free of corruption and manipulation
In traditional transaction systems there is always somebody or a group of individuals who own some kind of decision power. For instance, the ordinary bank controls how long a transaction takes and how much they charge for it. You as a single user do not really have much influence on that.
While in return, the blockchain database is diversified on many computers all over the globe and every single participant has access to view it. It is not possible to view the details of the transactions or the involved parties accordingly, your personal data stays confidential. The idea is to spread the information so widely, that it can’t be manipulated.
Imagine it like every single user has a copy of the database, not to view any confidential details, but to be ensured that any modification on any other database will be detected and immediately proven as false by the power of the majority.
Blockchain is blockchain is blockchain
The blockchain is a platform with a lot potential for many purposes. It is not limited to Bitcoin at all. While of course, currently the largest hype is exactly about this pair. But if you dig some deeper, you will find blockchain for medical records, voting systems, collecting taxes and more.
Let me close this post with another analogy. In the beginning the “platform” named “Internet” provided us with simple websites and the possibility to send each other e-Mails. Today we are having smartphones, smart-cars, smart-houses and so much more that is connected with each other.
Taking that into consideration, what do you think is possible with the blockchain in future?