Janice Ng, 2019
Bigger Picture: What is Blockchain?
- Blockchain is a type of database. It is a time-stamped series of immutable record of data that is managed by cluster of computers not owned by a central authority. Hence, it is distributed and immutable. The information on the blockchain is open to the public and is transparent.
What does that even mean?
[] words are Blockchain Terminology references
- In simpler terms, Blockchain is a software solution [protocol] for reaching an agreement [consensus] within a leaderless [decentralised] group of peers [peer to peer] that specific events occurred [synchronised], and everyone is aware and has copies [distributed] of all the changes and indisputable [immutable] historical list [ledger].
What’s in a single block on the blockchain?**
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In each block, it consists of: Data, Hash and previous block’s hash
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- Data: Depending on the application, the data varies. It commonly stores the 2 identities who are participating in the transaction. For example, Bitcoin consists of the transaction information between 2 individuals; the day, time, amount of money etc.
- Hash: A cryptographic hash to identity the unique block. If anything changes in the block, the hash will change and it is obvious that the block has been tampered with. Hash allows for easy detection to see if a block changed.
- Previous hash: The hash of the previous block is also linked to the current block, in order to avoid fraud and tampering.
Here’s an analogy to help:
- In a football game, each player knows the score at any time. You are unable to change the score without convincing everyone playing in the game. If the score were to increase and change, everyone in the game will know and has to verify if a goal has actually been scored. This is similar to the concept of Blockchain, as the Blockchain lives on thousands or millions of computers and everyone holds an identical copy of the network’s ledger of events, where the ledger is immutable.
- Everyone in the football game has to follow a set of rules. When a player fouls, a decision is quickly made amongst the others to decide whether an act upon the foul should be made, or to let the game just continue [consensus]. The ledger is the current score that all kids are keeping in their heads, which is agreed upon with all the players on the field. Ledger is immutable because a single kid [single entity] cannot change the score without convincing a majority that he/she is right.
- This takes a look at the higher level of Blockchain. All in all, blockchain is a time-stamped series of records of data managed by a cluster of computers that is not owned by a single entity. Since it is decentralised, it has no central authority and is open to the public.
Why Use Blockchain? What is the point?
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You probably heard of Bitcoin. Bitcoin uses Blockchain for peer-to-peer transactions, where there is no need to rely on financial intermediaries.
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There has been a lot of marketing hype over what Blockchain can do and offer. Since blockchain can ensure the data is tamper-proof and immutable, it provides many advantages.
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Middle-Men Free/Decentralised
- Transfer of transactions can be done diretly Peer-to-Peer manner, without a central authority (bank or agent)
- No censorship as there is no single party that controls the network
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Immutability:
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Offer immutable transactions from Proof-of-Work system, a process to reach consensus to agree on a single version of history
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No one can change or delete once published once the transaction has been executed
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Security:
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Decentralised system; less likely to be the target of a hack as there is no one single point of failure/ no single entity to attack
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Redundancy:
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With a distributed system, the data is distributed in multiple places around the world. This means that the data is extremely secure and impossible to lose.
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Trustless:
- Does not require people to explicitly know or trust each other for the system to function
- Pseudonymity empowers users to hide their true identity