Let me first start from what I think the problem Blockchain solves. Think about the files on your computer, the digital files on your devices, when you send something from you to me, what you are sending is a copy of the files. Here is the challenge, the internet decentralised communication and made it easy to share digital files and that is remarkable.
One thing that was lacking was the ability to easily send money/value digitally from Alice to Bob (peer to peer) without the help of a trusted third party (e.g Paypal, your Bank) simply because of the problem of copy/counterfeit. The trusted third party has to tell Bob that Alice has the digital money she is sending and she is not sending a copy or counterfeit, and ensuring that once she sends it to Bob, she can’t use it again.
Enter the blockchain
Blockchain is a decentralised ledger that allows for the creation and maintenance of immutable records. Simply put it is one really big book of records (ledger) that isn’t held by one person but thousands and potentially millions of people (decentralised) that can not be changed (immutable).
Thus when Alice send digital money from her wallet to Bob, that transaction is recorded on the blockchain and once it has gone there, everyone including Bob can see the transaction, the miners (accountants) would verify that Alice indeed has that digital money and she has the power to send it to Bob, then they verify the transaction as good to go.
Now the sweet part
Once a transaction has been verified, it becomes part of a blockchain, the other set of transactions that would be verified are also entered into another block and they are linked using cryptography (some really secure mathematical stuff) to the previous block, and then it goes, on and on, blocks just keep getting chained to each other forming the blockchain.
Now, it is said to be secure and immutable because for you to change anything in a block that has been chained, you basically have to remove all of the blocks that are stacked on top of that block. For this to happen you have to overpower the whole network and work faster than every other person who verifies transaction on the network, mind you everyone can see this happening. So it would be quite a feat. This is called a 51% attack on a network because you have to basically overpower majority of the miners to change anything and it can be a verry expensive venture. It would cost about $1.4 billion ($5 Billion is daily recurring electricity cost) to attack the Bitcoin blockchain and the max you can earn per day is 918BTC.
Why is everyone excited? In the past, we had to trust in authority figures to keep records – banks, hospitals, local governments, electoral commissions, etc. Now we can imagine a world where we don’t have to trust anyone to keep records of an event that has happened, imagine we didn’t have to trust that the other guy hasn’t sent me counterfeit land sale documents because I can see the document trail on the blockchain, imagine a world where your passport was useless, because your entire identity & history was on the blockchain and visible to anyone you give permission to view it. This is the reason everyone is pumped and is the reason everything went to the moon in 2017.
Now the elephant in the room: bitcoins and other cryptocurrencies
These are applications made possible by the blockchain technology. You can relate it to the way the light bulb made possible by electricity. In all eagerness I can say this is not even a tip of the iceberg, the possibilities and implications of this technology are far-reaching, we have only scratched the surface. This is the best time to be alive.
This article is partnership with Nairametrics and also appeared here
