What is Blockchain and how does it work?

We asked 5 people to explain what blockchain is and how blockchain works and here is what they said

Blockchain technology has been around for over a decade now. The first use case is Bitcoin and its ability to send and receive transactions without a middleman and the ability to trust in the public and transparent ledger that keeps the records.

How a blockchain works is rather complicated for non-technical people like me to understand so I asked 5 people to explain Blockchain and how it works and this is what they said:

David Cahill

You (a "node") have a file of transactions on your computer (a "ledger"). Two government accountants (let's call them "miners") have the same file on theirs (so it’s "distributed"). As you make a transaction, your computer sends an e-mail to each accountant to inform them.

Each accountant rushes to be the first to check whether you can afford it (and be paid their salary "Bitcoins"). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction ("proof of work"). If the other accountant agrees, everyone updates their file…

This concept is enabled by "Blockchain" technology.

Imagine a shared computer accessible to anyone, a single source of truth within which to store events, ownership, and activities, and to execute workflow involving multiple parties without the use of separate systems and databases - and with no reconciliation required.

It will change the way digital services are provided across all industries globally. Blockchain changes the rules, prepare for disruption or prepare to disrupt.

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Abhinay Kattingeri

Blockchain can be thought of as a technique or technology which is a combination of both concepts - Linked Lists and Pointers in Data Structures and Algorithm. Here each block comprises transaction details and what's called a Hash Code or think of it as an address to the previous block.

The Hash Code is what makes a block unique and difficult (almost impossible) to change or tamper with the data in it. Since all these blocks are tied up with one another (via Hashing), the technique is known as Blockchain. It would be almost impossible to change the data in a block - imagine tampering with the data in one of the blocks, this will trigger a change in the Hash which is ideally the address of the previous block. Virtually, the last block is being tampered with. Now, since the previous block's data is changed, its Hash changes which in turn will lead to an incorrect address or Hash of the block before it.

In other words, to change the data in one block, someone has to go back to the Genesis block to succeed, which is logically and computationally impossible.

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Arleen Aldaba

A blockchain is a type of DLT that is permissionless and characterized by storing transaction data in "blocks." These blocks are linked together using a hash pointer that contains the address of the previous block as well as the hash of the data inside the previous block.

Blockchains have many use cases, the most prominent being of cryptocurrency, payments (Bitcoin), and decentralized finance. Smart contracts are also a growing application of blockchains in sectors like real estate, healthcare, supply chain, and government. Content creation, music, art, and gaming are new areas for blockchain deployment.

There are huge and exciting opportunities for blockchain (and DLT) applications that are yet to be discovered and developed.

Wonnie

A blockchain is a database that contains transactions and thus history. Rather than using tables in a typical database, to store records, in a blockchain data is grouped in blocks. When a block is filled with data it is closed and linked to the block filled before, thus forming a chain of blocks. Each block in the chain contains the most recent data in the chain and links to the previous block in the chain.

It uses hash cryptography to start a new block. It's a database, but unlike regular databases, data can't be deleted, it is very difficult to change data once it is written in the block because it is closed. Each block contains the address of the previous block, transaction data, and the address of the next block. The data is validated, once that is done, it is all hashed together.

Thanks to the blockchain it is possible that data is decentralized. The blocks are linked but do not necessarily live on the same computer. This gives security, as it is not under the control of any one party. And it can not be tampered with. When there is new data, it is submitted to the distributed network of computers that validates the data. When this is done, the blocks are chained.

However, as the data is growing rapidly, computing the validity of transactions over the network takes more time. As with any database, the problem of scalability, when the data grows performance suffers. The data needs to be valid and secure, it all has to be validated quickly and correctly and stored safely. And the speed must be maintained despite a growing network. These aspects, decentralization, security, and scalability are known as the blockchain trilemma, it is believed that not all three can be achieved simultaneously, two at the most.

Jesse Browning

Blockchain is like using a worldwide Google Sheets to collaboratively edit & view a spreadsheet.

To avoid false data you can’t change stuff that you don’t have permission to change, you have to have a password (called a private key). Even with a password, other people will be checking your work and if you input false data, your input will not be added to the sheet.

A blockchain—THE blockchain—is like the ever-growing Edit History of that spreadsheet.

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Conclusion - What is Blockchain and how does it work

So there you have it. 5 different explanations of what blockchain is and how it works. To summarize, it can be said that a blockchain is a database or ledger that is shared or distributed across a peer-to-peer network of nodes. Nodes are just computers that run blockchain software.

What is innovative with a blockchain is that it guarantees the accuracy and security of data. And by using code, blockchains generate trust without the need for a trusted third party.

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