All in one contest W46:Crypto/technology

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Crypto for Beginners (Week 2)-What's a Blockchain? (The Magical Digital Notebook)

Hello everyone, and welcome back for Week 2 of my "Crypto for Beginners" series!

Last week we learned that cryptocurrency is simply secure digital money we can send to people, without the help of banks or governments.

But without anyone being in charge or keeping track of anyone's money, how do we even know how much money everyone has, or even prevent somebody from spending money that they don't have?

This is where the awesome system called the Blockchain comes in.

I'm going to explain it here in a way you don't need to understand complex computer coding to get it, think of it more as a fairytale and less as the boring instruction manual.

The Shared Digital Notebook

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Imagine 1000 strangers in a room, conducting a lot of business.
They all need a record of where every bit of the money has gone, but none of them can trust one specific person (say, Mr. Bank) to keep a single notebook containing all the records as both they could either lose it, have someone change the numbers with a bribe, or even have a fire burn the notebook.

In the Blockchain model none of those 1000 people can take part without them all getting a copy of the same notebook.

So now, when John sends $10 to Mary he will just stand up and tell the room "I'm sending $10 to Mary!" and at the same time, all 999 other people check if John does indeed have the $10, and if so they all write in their copy of the notebook that John sent $10 to Mary.

Even if John has changed that line in his copy (in order to keep his $10), the other 999 notebooks will all show that John sent the $10, so that the other 999 win the argument (or the votes).

This shared notebook is essentially a blockchain, or rather, an unchangeable digital ledger for transactions broadcast to millions, not just 1000 of computer nodes (or rather people).

Why is it called a "Block" and a "Chain"?

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So by now you should understand that it's essentially a shared notebook, but why the crazy word for it... "Blockchain"?

The "Block" (The Page):
Every piece of information has been bundled up on one of the pages. When the page becomes full it is sealed by a very complex mathematical lock (or rather cryptography) and "glued" or "chained" to the page before.

The "Chain" (The Glue):
If you were going to alter any of the previous pages in any notebook, let's say one from last year, then you'd need to "break" the mathematical lock on it, and the one before it, and the one before that, and so on, which the whole entire world of computers trying to hack it would notice because you'd also need to change all of the 999 other notebooks and they wouldn't let it go any further.

The three super powers of a blockchain

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Decentralization

There is no single body that can be shut down and the whole system would still be working, this is because even if one server or node is destroyed or goes offline, there will still be thousands more to make sure that it all keeps working.

Transparency

Everybody can view the transactions on the blockchain, even the transactions that have happened before.

Immutability

Because all of the transactions are recorded in blocks and then chained to the block that came before it, there are very few ways that you can tamper with them, the entire system would have to be tampered with at the same time for there to be any kind of modification possible and that is virtually impossible.

In short, you now know that a blockchain is simply an unhackable and transparent digital notebook where transactions are saved in blocks that have been chained together, this essentially makes it an unhackable and transparent storage device that enables crypto.

Next week we're going to dive in to probably the most popular cryptocurrency in the world. I will tell you what Bitcoin is, and who the elusive genius behind it is.

Thanks for reading, I hope that the explanation of blockchain was clear! Any questions, give me a shout.

The Week 3 post is coming on my thoughts regarding Bitcoin, looking at Satsohi Nakomoto (its inventor), it being digital gold (the limited supply) and how it is utilising the technology we covered today.

I invite @peacemike @okereblessing and @bossj23.