In 2017, Blockchain suddenly become a very populate topic of conversation. It was very difficult to not hear about Blockchain, Cryptocurrency or Bitcoin in your local pub, at work, in the gym etc. In this post I am going to demystify ‘what is Blockchain’.

What is Blockchain

Let’s summarize Blockchain on a very high level before we break it down into it’s core components. “Blockchain is a method of providing secure transactions. The validity of the transactions are never questioned and are always guaranteed to complete. Each transaction can not be challenged or reversed and each transaction becomes common knowledge to everyone the moment it is complete.”

Given the statement above, how does a Blockchain actually work?

Sharing Data

Let’s take a real world example such as this blog, we can use TheTestRoom to explain how a Blockchain shares and distributes it’s data. When a reader accesses any post on TheTestRoom, the reader is effectively looking at a copy of the original post served by the internet. This means there is a Master copy of TheTestRooms saved on the Internet. If I make a change to any post, the post would automatically be made available for all readers at the same time since a it’s master copy has been updated. This concept of sharing the master copy and having any changes published and distributed applies to the Blockchain concept.

When a ‘change’ occurs, since everyone has access to the same data, everyone automatically is updated of any changes. This therefore means that everyone contains a record of all changes at the same time. On a Blockchain, since everyone contains a copy of the same record, how is this secure?

Security

Firstly, let’s define what the term ‘transaction’ means. We will use a Bank as an example. When any money is deposited into your account, that process is referred to as a transaction. Similarly when any money is withdrawn, that too is called a transaction. In short, the act of your balance changing in your bank account is the collection of transactions occurring.

So, what can be ‘transacted’ on a Blockchain?

That depends on the context of a Blockchain. The most famous Blockchain perhaps is associated with Bitcoins. On the Bitcoin Blockchain, when Bitcoins are exchanged, that would be referred to as a transaction. This brings us to the question of how a transaction is secure.

When a transaction occurs on a Blockchain, firstly the transaction itself is encrypted. The data itself is secured and would not make much sense to anyone looking at it. The data itself can only decoded by the recipient. How does this happen? The transaction that takes place between two parties share what is called a private and public key. The keys are like passwords. When the data arrives, the passwords are used to open the data. Encryption is not the only thing that makes Blockchain transactions secure, there is more.

Confirmation Checks

Since all the users of a Blockchain contain the same data, this means it would be impossible for anyone to change their data and perform a transaction expecting it to complete successfully. Let us explain what we mean here. When a transaction takes place, one of the confirmation checkpoints a transaction goes through are ‘confirmation checks’. How are confirmation checks performed?

When a transaction occurs, the Blockchain checks with some random Blockchain account holders to see if their copy of the data matches with the data of the parties in question. If the data matches then more comparisons are made with many other copy holders. Once there are enough confirmations, this proves the data for transactions is valid as every master copy that was checked is identical. If there is a single mismatch, the transaction is cancelled and not fulfilled. This concept gives Blockchain the ability to have both secure and guaranteed transactions.

That wraps up our definition and explanation of what a Blockchain is. Let’s now take a look at it’s possible applications.

Applications of the Blockchain

At present, purchasing a property can be daunting. You would have provide evidence of your identity, your income, find relevant people in professions of legal and finance etc. Currently this process can take anywhere between 6 – 12 weeks to complete. Imagine for a moment how quickly the purchase of a house would be if the transaction occurred on a Blockchain. Validation and confirmation would be done on the Blockchain and the process itself would not take more than some days.

How about keeping track of medical records of patients? They would almost always be up-to-date and accessible from around the world. Each record would also be protected by the user via their public and private keys.

Well, at the end of all of that, do you feel you have gained an understanding on Blockchain? Let me know in the comments section below.