Simplifying Big Words: An Easy Guide to Blockchain

The technology industry has a complex lingo. Like the average person with limited tech literacy, I too get frustrated for not understanding the complicated “booming” tech terms, including things like Ethereum, smart contracts, and mining. Well, as I wholeheartedly believe in the UN’s fourth Sustainable Development Goal (SDG), which aims to achieve inclusive and quality education for all, I will help you understand some tech terms based on my extensive research (aka watching YouTube videos). Today’s big word is Blockchain. Let’s break it down in the simplest way possible. Warm-up your brain cells!

To understand what is Blockchain, think of your spending excel spreadsheet or the google document you created for your class group project. They all relatively have the same purpose: to store data. Yet, blockchain is much more advanced. It is a database technology that stores the data in blocks. The batches of information, or rather the blocks, are all linked in a chain. Digital or virtual currencies are based on Blockchain technology, including Bitcoin.

Each block has three components: the data, the hash, and the hash of the previous block. Let’s break it down further.

Each Block has:

Data: The information of the transaction.

Hash: Nope, I don’t mean that hash. A hash is a fingerprint or a unique password of the block.

Previous Hash: The password of the preceding block.

Simplified Example:

Block #1:

Data: Salma sends 2 Bitcoins to Taher

Hash: 4A66

Previous Hash: 0000

(There’s no previous hash here, as it is the first block in the chain. It is called the “Genesis Block.” All the information ties back to it.)

Block #2:

Data: Youssef sends 5 Bitcoins to Marwan

Hash: 67W0

Previous Hash: 4A66

Block #3:

Data: Marwan sends 1 Bitcoin to Nour

Hash: Z82H

Previous Hash: 67W0

And so on…

Why are the blocks connected?

The answer is simple. A new hash is created with each new block. The blocks are linked to record the transactions from the very beginning, which in turn makes it nearly impossible to alter the information, as every block has the reference of the previous one. If you make any minor modifications, the hash will be changed. It is like you are adding to the exciting information on a document instead of rewriting it. So, the changes made will be saved forever. You can’t undo or delete the search history.

Who controls the Blockchain?

Unlike your spending Excel spreadsheet, Blockchain has no owner controlling everything. It is a decentralized consensus algorithm, where the database is open and relatively controlled by everyone. Each member of the network-called a node has a copy of the document; in the Blockchain case, it is called a ledger (which means one chain). Let’s take an example to simplify the concept. Imagine that you want to transfer six Bitcoins to your friend X for his birthday. It is a new transaction, so a new block is created. Yet, the nodes have to verify the legitimacy of the new data first, by making sure that you have the six Bitcoins you want to transfer to your friend X. If all members of the network verified the data, then the new block will be added to the chain. This peer-to-peer (P2P) network ensures that there is no tampering with the data.

How is the Blockchain secured?

Besides the P2P network and the hash, there is a process called “A proof of work.” It is a mechanism that slows the creation of a new block until verification. For example, Bitcoin takes ten minutes to complete the proof of work of any new block. In other words, the block is validated and added to the chain, when miners solve a complex mathematical problem related to the hash, it is the process of Proof of Work (PoW).

In short, Blockchain is a decentralised database technology that uses math and cryptography to store digital information. The algorithm is mainly used in cryptocurrencies, yet the concept goes beyond that. It can be implemented to store any form of data, from transactions to NFTs ownership and voting. Blockchain is challenging the status quo and acting as the middleman we didn’t know we needed.

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