What is BlockChain? “In Simple English”

Blockchain vs Internet

Before we go into any details of what the blockchain is, let’s set our mind with this logic:

“blockchain is today what the internet was in the 1970s and 1980s.”

Let’s be blunt about this, the internet is amazing, and it’s changing the world, fundamentally touching almost all aspects of life. The internet plays a role in how we work, learn, communicate, play, and so much more. It has significantly impacted industries like newspapers and brick-and-mortar retail, reinvented others like how we manage our money, and created new industries such as social media and online dating or shopping.

You get it, the internet has been a big deal and continues to be. Of course, it’s easy to focus on all the positives of the internet, such as low-cost communications anywhere in the world, low barriers to setting up and running a global online business, and new ways to access healthcare information and services. We’d be kidding ourselves if we didn’t recognize that the vast network of networks didn’t have some stubborn problems associated with it.

Beyond some of the obvious, social media trolling, software viruses, online fraud, fake news, and criminal hacking, the internet often struggles with the fundamental challenges of trust. We face ongoing questions such as is the person you are doing business with online really who they say they are? Is a service real? And are only authorized people granted access to private systems? Of course, we could all think of hundreds of other examples of trust on the internet.

Healthy ecosystems rely on trust. Now, this being said, we’ve done wonders with existing technology. In addition to usernames and passwords, we now use two-factor authentication, which requires more effort to validate an identity for an individual. We have firewalls and intrusion detection systems, biometric such as using your fingerprint for access, and CAPTCHAs, those online boxes that require you to type in letters and numbers from a photograph to prove you’re not a computer.

With these mechanisms for security and trust, we’ve come a long way, and yet we still get hacked. Our systems and databases are compromised, made unavailable, money and identities are stolen, and our confidence to innovate even further using the internet is stifled and, at worst, impeded. If we want ironclad online voting, workable digital currencies, confidence in machines talking to machines, self-driving cars that securely negotiate with each other, improved and seamless methods to authenticate identity, and more, we’re going to need a more secure and trustworthy internet. Blockchain might just be that next big thing, “the future of internet.

what is blockchain?

Blockchain technology is like the internet in that it has a built-in robustness. By storing blocks of information that are identical across its network.

A blockchain is made up of two primary components: a decentralized network facilitating and verifying transactions, and the immutable ledger that network maintains. Everyone in the network can see this shared transaction ledger, but there is no single point of failure from which records or digital assets can be hacked or corrupted.

Blockchains has the potential to “build a new generation of transactional applications that establish trust, accountability, and transparency at their core while streamlining business processes and legal constraints.”

Blockchain, the backend database technology that makes Bitcoin work, is one of the most exciting technologies emerging right now. Although commonly associated with Bitcoin, blockchain technology has many other applications that go way beyond digital currencies. Bitcoin is only one of several hundred applications that use blockchain technology today.

In other words:

“Blockchain is to Bitcoin, what the internet is to email”

Beyond cryptocurrency, it’s redefining how we store, update, and move data across networks. It’s enabling a completely new way to write and deploy applications. It has the potential to improve online security and trust. It may even enable the creation of a new type of organization that is without hierarchy and centralized decision making.

The blockchain is a work in progress. Being open sourced, it is continually being updated. In addition, how the blockchain is being applied continues to evolve in surprising and compelling ways. Here are just a few of the innovations that the blockchain is enabling. Up until now, we’ve been talking about discrete data being stored in blocks in this distributed database or distributed ledger as we prefer to call it. But what happens if instead of simple data, a block contains some instructions that under certain circumstances are executed? In this way when a certain blockchain transaction takes place, some set of actions are triggered.

This is one of the most exciting areas of the blockchain and we call it Smart contracts. While a Smart contract actually is software code executed on the blockchain, the terminology used of the word contract indicates that the code enforces some form of governance or rule. We should think of this as the general concept since many argue that the use of the term Smart contract is also misleading.

The term “smart contract” simply describes computer code that can facilitate the exchange of money, content, property, shares, or anything of value.

When running on the blockchain a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met. Because smart contracts run on the blockchain, they run exactly as programmed without any possibility of censorship, downtime, fraud or third-party interference.

Cryptography / cryptocurrency

Cryptography involves creating written or generated codes that allow information to be kept secret. Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. “decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation”. The following describes how cryptography is used in cryptocurrency.

At its simplest, Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. With no central point of failure and secured using cryptography, applications are well protected against hacking attacks and fraudulent activities.

Like Bitcoin, Ethereum is a distributed public blockchain network and no one controls or owns Ethereum — it is an open-source project built by many people around the world.

However, Bitcoin and Ethereum differ substantially in purpose and capability. While the Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application.

Miners in the Ethereum blockchain work to earn Ether, a type of crypto token that fuels the network, also used by application developers to pay for transaction fees and services on the Ethereum network.

While all blockchains have the ability to process code, most are severely limited. Ethereum is different. Rather than giving a set of limited operations, Ethereum allows developers to create whatever operations they want. This means developers can build thousands of different applications that go way beyond anything we have seen before.

Hyperledger of the Linux Foundation is one of the projects you will inevitably stumble upon when you visit blockchain conferences and follow blockchain news. With it, the Linux Foundation aims to create an environment in which communities of software developer and companies meet and coordinate to build blockchain frameworks.

Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, IoT, supply chain, manufacturing, and technology.

The most fundamental difference between Ethereum and Hyperledger is the way they are designed and their target audience. Hyperledger is not a company, a cryptocurrency or a blockchain but rather something like a hub for open industrial blockchain development

The Hyperledger Fabric (one amongst the many Hyper ledger projects) is a blockchain infrastructure that Delivers an architecture that accomplishes the configurable agreement, smart contracts, and association services. It covers the peer nodes that implement the chain code of blockchain development, ledger data, endorses record with applications.

There is so much hype and confusion in the blockchain, distributed ledger and cryptocurrency world and one name that keeps increasingly coming up in that space is Ripple.

While Bitcoin is a digital currency intended as a means of payment for goods and services, Ripple is a payment settling, currency exchange and remittance system intended for banks and payment networks. The idea is to provide a system for direct transfer of assets (e.g. money, gold, etc.) that settles in almost real-time and is a cheaper, more transparent and secure alternative to transfer systems used by banks today, such as the SWIFT payment system.

Bitcoin is based on blockchain technology, while Ripple doesn’t use blockchain but uses a distributed consensus ledger using a network of validating servers and crypto tokens called XRP (sometimes referred to as Ripples).

To sum-up, Blockchain technology stands to revolutionize the way we interact with each other, track and store data. Its decentralization of information reduces the ability for data tampering, create trust in the data and eliminate intermediaries.

Just like the rise of the internet, blockchain will bring with it all kinds of changes, challenges and complex questions around Security, governance, international laws, trade, and economics. But whether it lives up to its promises remains to be seen.

This article is a result of researches and online courses by Jonathan Reichental, articles by Bernard Marr, and Blockgeeks.

Also check out, potential obstacles to blockchain adoption.

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Yann Mulonda

Chief Information Officer @ITOT | Lead Senior Site Reliability Engineer @ICF󠁧󠁢󠁳󠁣󠁴 | "Learning is experience; everything else is just information!”