Blockchain Simplified

You might have heard of the word “Blockchain” being thrown around recently unless you lived under a rock. It appears to be one of the year’s buzzwords. But it seems that many people don’t know what blockchain is or how it works.  

Let’s take a Google spreadsheet or Windows Excel (MS Excel) example. This table is shared between different computer networks, where everybody has a copy of it. The table contains information on real people’s transactions. This spreadsheet can be accessed by anyone, but no one can edit it. This is blockchain. It works with Blocks, where “rows” and “columns” work as a spreadsheet. A block in a blockchain is a data gathering. In blockchain, the data is added to the block by connecting it to other blocks in chronological others, creating a linked chain of blocks. The Blockchain’s first block is called Genesis Block. Blockchain is a distributed ledger, which simply means a ledger is distributed across the network among all peers in the network, and each peer holds a copy of the full ledger.

Some of Blockchain’s key attributes are proving that blockchain is better than traditional ledger information retention systems:

Peer-To-Peer: No central authority to manipulate or control it. All participants are talking directly to each other. This allows the exchange of data directly with the involvement of third parties.

Distributed: The ledger is spread over the entire network, making it not so easy to manipulate.

Cryptographically secured: Cryptography is used to make the ledger tamper-proof for the security services.

Add-Only: Data can be added with time-sequential order only in the blockchain. This property implies that it is almost impossible to change that data once data is added to the blockchain and can be considered virtually immutable.

Consensus: This is the most critical of all attributes. This gives blockchain the ability by consensus to update the ledger. That’s what gives it decentralization power. The updating of the ledger is not controlled by any central authority. Rather, any updates made to the blockchain are validated against strict criteria defined by the blockchain protocol and added to the blockchain only after all participating peers/nodes on the network have reached consensus.