Everything You Need to Know About Blockchain
No, it is not Bitcoin
I’m sure you have heard or read this term at least once in the recent past. Maybe in a newspaper in an article about the soaring Ethereum prices, or Elon Musk’s impactful tweets. Or maybe you just heard it in a heated debate about whether Bitcoin is an actual investment or just a gamble.
In any case, it is quite evident that Blockchain is one of the hottest topics among the global audience at the moment. And it is due to this very fact that having proper knowledge about it becomes important. That is what I aim to do here. Being a software developer+student, I’ll try to break it down into understandable, yet knowledgeable parts so even a non-tech person could understand what I’m talking about.
Before we actually get to that though, let me get one thing out of the way:
Blockchain is not Bitcoin
This is really important to understand. Yes, blockchain first came out because of bitcoin. And yes, bitcoin running on blockchain is one of its most important features. However, bitcoin only runs on a blockchain, it is not blockchain. Blockchain is a technology, and bitcoin is its use case.
And not just bitcoin, all of crypto is a use-case of blockchain. They utilise the technology. However, blockchain can help to revolutionize numerous other sectors, some of them not in the slightest related to finance.
Definition of a use case: a use case of a technology can be defined as its application to do something of value. Here, when we say bitcoin is a use case of blockchain, it simply means that bitcoin uses the blockchain technology to do something valuable.
With that out of the way let’s get to what it actually is.
What Is Blockchain
We know it is not bitcoin, but then what is it? According to Investopedia, “Blockchain is a specific type of database”. That definition, though not explanatory, is a 100% apt. Blockchain, essentially is a database.
What is a database? A database is simply a place where you store large amounts of data. Every dynamic website on the internet uses some kind of a database. For instance, all of Microsoft’s data, for example the MS Office profiles, must be stored somewhere in a database, in a special form.
But Agrim, we already had so many databases before it, I’ve never seen such a hype about them, why are people so excited about this?
Well, that’s simply because it is a revolutionary database. Traditionally, databases would structure data into tables(SQL) or documents(MongoDB), and fetch them later whenever needed from those very files. Blockchain scrapped those methods, and decided to store the data in form of ‘blocks’.
Each so called block would store a chunk of related information, and a way to reach the previous and the next block. That’s actually what the word breaks down into: Blockchain is a chain of blocks. Initially in every blockchain, the first block, or the genesis block is generated, and then every time new data needs to be recorded, it is stored in a new block, and the block is added to the chain.
That’s all that blockchain is. Surprising no? Such a hyped term, and all it is is a different form of doing something we could already do earlier? What’s the point? Well, this way of storing data has completely revolutionized the tech world. Let’s see how.
Understanding The Hype
There are various features of blockchain that make it so different from everything else already present out there. Let us go over those features one by one, and eventually their consequences when combined together.
Blockchains are fully transparent. Once blockchains are deployed, everything happening on it is completely visible to everyone. Remember the other databases? In those cases, until you specifically did something to make data accessible to the people, it would obviously be accessible to only the device storing the files, or the devices having remote access at the max.
That’s not the case with blockchain. It would allow everyone to have access to the files, with no restrictions.
Imagine having full transparency in your country’s taxation system. You could know exactly where all your money is going, without the government having any chance of even trying to manipulate the data. A more honest world, isn’t it? I could list tons of other such applications for this. Transparency is something we all could use right now.
Of course, there are ways of setting up private blockchains, where you could manage access, and reduce the transparency if you wish to do so. But everyone would know that a blockchain is a private blockchain(a small group controlling it) or a consortium blockchain(within an organisation) before logging on to it. And for purposes where you do need full transparency, you would not be logging in to any of these. And the fact that it is not possible to change the type of blockchain(public/private/consortium) after its deployment adds to the reliability.
Note: You might enjoy having a look at all recent Ethereum blockchain transactions at https://etherscan.io/txs ;)
Data once stored on the blockchain, cannot be changed or removed. Even if you change a specific detail about something, that is done in a new block which is then added to the chain, but the old block cannot be removed no matter what you do.
The reason behind this is quite simple, every block is related to its previous and next blocks in the chain. So if you are changing a particular block, you need to change its previous and next blocks too, and then of course their previous and next also, and so on.
This would then cover the whole blockchain. So if you need to change even 1 block in the existing chain, you need to change all of them. That, of course, is not feasible. To get an idea about how difficult that could be, you could imagine changing the Ethereum blockchain, which currently occupies around 240GB with all its data.
Most public blockchains run on multiple nodes. A node, in the most non technical terms is a computer running the blockchain. So in simpler words, there are multiple nodes running the blockchain. Hence, the running of the blockchain does not depend on one centralized source. This reduces the chance of the blockchain ‘failing’ temporarily at some point.
Let’s understand this with an example. Remember how Facebook servers crashed a few months ago? We weren’t able to use Whatsapp, Instagram or Facebook for almost an hour. That was because the servers for Facebook are centralised. Once the server failed, there was no way facebook could respond to our requests, which could be sending a message, or commenting on a post.
If something like this happens in a blockchain, however, you would still be able to do all of that. That is because all those nodes are running the blockchain independently. So even if one of them fails to work at some point, the others can cover up for it, and essentially the users don’t see a difference.
Hence, the efficiency goes up to almost 100%, which, by the way, was the uptime of the Ethereum blockchain last year.
This, again is related to the multiple nodes running the blockchain. Let’s imagine 2 scenarios: first, a hacker trying to hack Google and second, the same hacker trying to hack a blockchain.
Hacker: I need to hack the Google servers at this location. Let me study everything about cyber security.
(studies and acquires excess knowledge and powers. A year later:)
Hacker: I successfully understood how their cyber security is working, and managed to do a security breach. Yay!
Hacker: I need to hack this blockchain. Let me study everything about it.
(studies and acquires excess knowledge and powers. A month later:)
Hacker: I successfully understood how their security systems are working, and managed to do a security breach. Yay!
Hacker: Wait. Why is the blockchain still unaffected?
Let me tell you why. The hacker, though very smart, successfully hacking a blockchain node, did not realise that hacking into 1 node will not gain him anything. As the blockchain is running on so many different nodes independently, hacking one of the nodes did not make a difference to anything.
He would have to hack at least 51% of all nodes at once, and only then would he be able to do some damage. That, of course would not be feasible for someone like him. Hence, he decides to let it go and eventually gets arrested.
This is exactly what the blockchain is helpful for in this regard. It is practically impossible to actually hack a complete blockchain, and hence the security.
“Okay. After seeing everything above, it does feel like blockchain is different from existing technologies, it is transparent, immutable, efficient and secure. However, does that really help me that much?”
Yes, it does. The efficiency and security factors are of course desirable and there is no need to explain why. As for the other 2, transparency and immutability combine to form the perfect environment for decentralisation of the internet.
As all data will be transparent, and no one will have the power to manipulate it, it could lead to the transfer of power from the hands of big corporations to the people using the services. That includes you, me and everyone we know.
As long as we are using a particular service, we are its owners. An artist can get fan donations directly, without having to have a controlling authority taking 20% share in between. A cab driver could get the complete fees for his ride, without having to give a chunk of it to someone, while still ensuring safety.
This is why these features are important. And this is what is causing the hype. That concludes this section, and the article as a whole.
We started from scratch, and now have an idea of what a blockchain is, and why it is such a revolutionary thing. Please note that all these discussions are about the blockchain in general, and are not in any way related to bitcoin specific advice. With that, I have said everything I wished to say, and am hence ending the article here. I hope it was helpful, and you gained something from it. Cheers!