WTF is Blockchain?!
I do not have a technical background or any deep experience in coding so when smarter people explain Blockchain I can’t get past all of the technical language.
This is my attempt at trying to describe Blockchain in plain english.
First of and foremost, Blockchain is a technology that popular Cryptocurrencies such as Bitcoin were built on.
Blockchain is also known as Distributed Ledger Technology. Let's clarify. What is a Ledger? It is a record book, log or register that can be used to store any value information like money, goods, property, work, or even votes.
Distributed in this case refers to a ledger being held by more than one party distributed to a network.
Today, when you give someone a check to deposit their bank goes through a “clearing” process where the two banks basically confirm the identities and amount. They record this information on a ledger and provide a statement of account for each party. Banks maintain money balances and transfers; they briefly hold the amount while they make the transfer.
The banks are a 'trusted' third party that hold a ledger for all transactions. Imagine your online bank statement but for ALL transactions that took place within that bank.
Let's take a look at a common example of purchasing a home.
When two individuals enter into purchase agreement for a property, the money and title are held in trust (escrow) until a trigger event such as the possession date takes place.
Let'st try to use this example to describe Blockchain.
Blockchain allows two people who do not know each other enter into a purchase agreement without the use of an escrow.
Here's how it works.
The details of the agreement are stored in the block- John is buying this property from Bob and will move into the property on xDate. Once John moves in on xDate, Bob is to be paid $X amount and John receives the title of the property.
Imagine John and Bob having a key to a glass safety deposit box of which only they can see the contents. They see the money, the title and the agreement. Once the agreement has been fulfilled - Bob’s key has access to the cash portion and John’s key has access to the title portion. The entire transaction is then verified by a ledger which is recorded by an entire community of stakeholders. The transaction is set to be true only when the entire community confirms and record of it will forever be included in all future transactions. Each block has a record of the previous transaction as recorded by all individual community members- this means if someone wanted to alter the ledger they would need to do so on every individual ledger... (well up to 51%) This is extremely costly but I am still
skeptical to say it's impossible.
When Sarah and Pam enter into a purchase agreement the block will have record of John and Bob’s previous transaction so on so forth- This is what makes Blockchain decentralized– there is no requirement of one individual third party to confirm and record the transaction – it is done so through a decentralized network every time a transaction takes place.
At least that’s how I think of it but if you have a better explanation I would like to hear from you!