One of the most often asked questions people come across these days has nothing to do with Bitcoin directly. Instead, people ask themselves “What is blockchain? Not a blockchain, or THE blockchain, but the concept in general. As banks are trying to show the world, the concept of blockchain applies to traditional finance, although there are other use cases out there. But what is blockchain?
What is Blockchain? – The Concept
When trying to explain the concept of “what is blockchain”, picture it like this. You have a certain list of information, whether it is finances, grocery shopping, a contact list, or anything else you can imagine. But you are the only one with that list, and there is no copy available as a backup.
On paper, there is nothing wrong with this concept, unless something were to happen to either the list or yourself. If the list goes missing, no one but you will know – roughly – what was on there. Or if something were to happen to you, no one might be able to find the list, as they don’t know its precise whereabouts.
This creates an awkward and annoying situation. Being the central authority to create and own said list brings both power and responsibilities to the table. Ultimately, the central authority becomes a point of weakness as there is only one list with this vital information available. Granted, others can try to piece together the list, but it takes a lot of time and effort.
It would be much better if there were multiple copies of that list, spread in different locations. All of the information on that list could be verified against the other copies in existence, ensuring there are no mistakes made. Additionally, if one list would not match up with the other records in existence, that list would be deemed invalid. With multiple copies in existence, it becomes all but impossible to tamper with the information.
This example is an answer to the what is blockchain question. Blockchain is a distributed ledger – multiple copies of the same information – in a decentralized manner – with multiple locations and a copy of that list. When somebody asks you “what is blockchain”, you can use this example to explain the concept to them.
However, this is not the complete answer to “what is blockchain?” , as there is an entire technological explanation that needs to follow this example. While we will cover that information in the next part of this series, it is important to note there are other things to mention when talking about what is blockchain.
Imagine your list of information needs to be updated with additional details. Spreading that information to other parties owning the same information is critical. Translating this to the “what is blockchain” principle, that update process will happen automatically, as all parties involved will receive the new data at the same time, and start comparing notes to determine its validity.
What is blockchain? A tamper-proof distributed digital ledger of information, which exchanges information between all independent ledger operators. This process is called “decentralization”, as there is no central point of failure. Information is accessible at all times, and records are maintained and updated automatically. We hope this gives you an answer to the “what is blockchain” question.