This is a beginners guide to blockchain, written by a beginner..
Blockchain has quickly become a hot topic on social media and TV and it’s a big focus point here in the Trisent office too. I am the office manager and I know my way around a spreadsheet, but when it comes to the deep techie stuff I am often at a bit of a loss. I decided it was time to get my head around blockchain so I can be part of the office conversations. From the information I read online, I initially found the concept difficult to grasp for my non-techie mind. But, I have persevered with my research and with some help from the office techies (frankly at times baffling) explanations, I have discovered that the idea is actually quite simple.
My understanding and explanation of blockchain technology..
A blockchain is an ever growing list of records or “blocks”. It is a digital ledger which provides a secure way of making and recording transactions and files that cannot be altered. Rather than being kept in a single location like the more traditional ledger book (think of banks, accountants etc), a blockchain is shared across a network of computers meaning the information is public and can be accessed by anyone on the internet. This has great advantages as no centralised version of information exists, making it almost impossible for hackers to corrupt.
Contained within each block is a “hash” of the data in that ledger entry. A hash is a unique fixed length signature code for the data. Each ledger entry has an additional piece of special data (called a nonce) added to it that ensures that the hash for each ledger entry will begin with a series of all zeros.
Blockchain ‘miners’ with special computer software compete to find a nonce for each new proposed ledger block entry that will result in the series of zeros. The first miner who finds a valid nonce code receives a reward (for example, in the Bitcoin network the miner would receive an amount of bitcoin). These codes are very difficult to find, but once a miner has done so, it is easy for others in the network to check they are valid. Once validated, the new block is timestamped and added to the chain in chronological order. The new block is linked to the previous one, creating a chain showing every transaction made in the history of that blockchain.
The blockchain network of computers is regularly updated so that every ledger in the network is always the same. The cool thing is that if anyone changes any of the data contained in the blockchain, it will not agree with other versions held by others and it automatically rejected by a democratic process. So, once information is recorded in a blockchain based ledger is cannot be tampered with. If my brother transferred all his Bitcoin to me, he couldn’t then pretend to still own it since the transaction is recorded on the Bitcoin blockchain and he would be unable to alter the record of this fact.
It all makes sense to me now, but I did read the blockchain ‘made simple idiots guide for dummies’ first, and in reality, it was this video explanation that finally got me there, enjoy!