Have you heard about the blockchain technology before? Or are you a lazy dummy who Google’s everything and just reads the Wiki description to get to know about something? Don’t worry, we got you covered…but you have to read this piece carefully and thoroughly, this ain’t your Wiki description. Let’s get started..
Boring Old Banking System
Imagine you want to send a particular amount of money to someone in another city. You go to a bank. That bank charges you some fee and transfers the amount to that other person. The other person who is using the bank for receiving the money is also paying a certain amount of fee to the bank for using its services. So, throughout this process, the bank is the thing that is always involved. It is that one person which no one likes to invite to a party but has to because the drinks are on this guy.
Blockchain is going to be your new “technology crush” I am telling you in advance. Imagine a group of people comes up to you. This group offers you an opportunity to join the group and share money with anyone else in the group without the bank getting involved. Hallelujah! *rays of light emerge from the background*
All the people in the group manage all the proceedings themselves. You invite the person to whom you want to send the money in the same group and send him the money instantly with the help of your new friends in the group. No charging of fees unlike banks. You have your own little community sharing money seamlessly. The group has an unlimited supply of drinks so, bubye banks.
Now, this is exactly what a blockchain is. The group itself as a whole is a blockchain. The people involved in it are nodes. Nodes in a blockchain network can communicate with each other and the remaining nodes can see the proceedings happening. All the activities of the network are visible to all and everybody has the history of the network saved in a ledger. Everybody has the same ledger so a uniformity is obtained. A transparent, secure and distributed network of operations free from any forgery from a third-party.
Now in this group that you just joined, there are some special people who like puzzle solving, the miners. Whenever you say you want to send ‘A;’ some amount of money, you present a puzzle to the group. The miners immediately start solving the puzzle. Whoever solves it first, gets a reward. This incentivizes people to stay in the group.
This is exactly what happens in a blockchain. Whenever a transaction takes place on a blockchain network, the miners try to validate it first to get the rewards. The puzzle is a hash number or a random number. Miners keep on guessing until they find the correct one. Whoever finds the solution gives it to the others in the group and writes about the transaction in its ledger. Following the winner, the remaining nodes in the network also write down the new transaction in their ledgers. We get a peer-to-peer “distributed database”.
So, What Should You Remember?
If you are a dummy and also happen to forget things quickly, you need to get yourself checked. Just kidding, remember that blockchain is a collection of nodes which work together to perform certain operations themselves eliminating the need of a third party. All the happenings are visible to all and a transparent fabric of operations and proceedings is established.
So, whenever you feel there is a need for eliminating a central controlling party, call blockchain. No more going to Craigslist to buy things from other people, make a blockchain and connect with others directly. Wait, why am I not building my own decentralized Craigslist?
Procrastination? Maybe I don’t have enough knowledge?
Or maybe I am saving it for you guys?
Godspeed dum dums.