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Ask LH: How Can I Find Out If Someone’s Stealing My Wi-Fi? What Is ‘Google One’ And Do You Need It? All of a sudden, blockchain is everywhere. Considering the daily churn of news around blockchain, not to mention the skyrocketing value of Bitcoin and other cryptocurrencies that rely on the technology, you may be wondering what the hell blockchain actually is. It’s actually a pretty simple concept, though things quickly get more complicated the harder you look. With that in mind, here are a few different ways to wrap your head around blockchain, from straightforward definitions to far-reaching metaphors. To start, here’s the simplest explanation with no metaphors or hyperbole.
Once each block is completed it’s added to the chain, creating a chain of blocks: A blockchain. People who solve these equations are rewarded with cryptocurrency in a process called “mining”. With this key you can withdraw currency to spend, but if you lose the key there’s no way to get your money back. Each account also has a public key, which lets other people send cryptocurrency to your account. Information on the blockchain is also publicly available.
So any transactions are instantly visible to everyone. That brings us to our first metaphor: The public ledger. Other people may not know your identity, but they know exactly how much value has been transferred from one person to another. Many people see blockchain as an alternative to traditional banking.
Instead of needing a bank or some other institution to verify the transfer of money, you can use blockchain and eliminate the middle man. The Internet of Value’ Building off the idea of a public ledger, another popular way to describe blockchain is as the internet of value. The idea is pretty simple: The internet made it possible to freely distribute data online, blockchain does the same thing for money. Blockchain and cryptocurrency make it just as easy to transfer money across the world by bypassing traditional middlemen like banks and even governments. Blockchain Is Like Google Docs Here’s a clever metaphor for blockchain from William Mougayar, the author of The Business Blockchain: Blockchain is like Google Docs. Before Google Docs, if you wanted to collaborate on a piece of writing with someone online you had to create a Microsoft Word document, send it to them, and then ask them to edit it. Then you had to wait until they made those changes, saved the document, and sent it back to you.
Google Docs fixed that by making it possible for multiple people to view and edit a document at the same time. However, most databases today still work like Microsoft Word: Only one person can make changes at a time, locking everyone else out until they are done. Blockchain fixes that by instantly updating any changes for everyone to see. For banking, that means that any money transfers are simultaneously verified on both ends. Blockchain could also be used in the legal business or architecture planning – really any business where people need to collaborate on documents. Blockchain Is Like a Row of Safes Here’s another useful explanation from online forum Bitcoin Talk. Imagine there are a bunch of safes lined up in a giant room somewhere.
Each safe has a number on it identifying it, and each safe has a slot that allows people to drop money into it. The safes are all made of bulletproof glass, so anybody can see how much is in any given safe, and anybody can put money in any safe. When you open a bitcoin account, you are given an empty safe and the key to that safe. Blockchain Is Like DNA Finally, this one, from Robin Chauhan on Medium, is a little far out, but I like it. Blockchain is a record of transactions, spreading across the internet as more people use cryptocurrencies.