A Simple Explanation of “Blockchain”
Sometimes it takes a while to thoroughly understand a new concept. Blockchain is such a term for some people. One of the things that process difficult is the fact that it sounds like something that it isn’t….or it seems so at first.
In the case of blockchain….It’s not actually a ‘block´. Or is it?
And it sure isn’t a ‘chain’. Or is it?
Actually, when the term is explained the way that I’m going to, it is a block and it is a chain. But first, let’s try a definition of blockchain from another angle. An angle of use or utility.
Blockchain is, like many other great technological advances, a tool designed to solve a problem. It was invented to make certain things easier to accomplish and more efficient.
In the evolution of capitalism, we see that many great inventions and advances were efforts to make something easier… such as these advances in computers and the internet….
The internet made it much easier for specialists to publish.
Blogging made it even easier for everybody else to publish.
WordPress revolutionized blogging and publishing even more.
Google revolutionized information search and retrieval.
Facebook dramatically changed social dynamics (some would argue for the worse).
YouTube revolutionized media creation, entertainment, and distribution.
The ‘cloud’ made it easy to store digital material and eliminated some IT resource problems.
Outsourcing sites like Fiverr, Odesk, et.al. revolutionized outsourcing.
And there are probably other ‘advances’ that could be added to the list too. But the point is that each step forward made something easier that it had been.
So….Blockchain needs to be seen as a tool for making something easier.
But…. making what easier?
Blockchain makes recording transactions (i.e. anything that could be described in finite terms) easier. Currently the most publically topical type of transaction that blockchain is used for is cryptocurrency transactions but it can be used for many other types of transactions too.
The important connecting factor here is that transactions need to be recorded in some way…especially financial transactions and blockchain specifically makes that process easier, faster and more secure. Even to the point of total anonymity.
The unique aspects of a blockchain include the following characteristics:
Blockchain is decentralized
Blockchain has no central controlling authority
Blockchain Is owned, maintained and updated by its component the nodes…i.e. the members.
Block is much more efficient and trustworthy.
Note: Not always mentioned by public relations representative of various industries touting blockchain in their operations is the fact that it has great potential for reducing the number of 'humans' on their payrolls.
To summarize thus far…blockchain is an advance in efficiency. Especially in multiple attributes related to saving time and user confidence.
Now…onward to the terminology to which most people cannot attach a mental image.
The term ‘blockchain’ comes from the way that blockchain transactions have been illustrated as being sequentially and carefully been added to one another… somewhat like a chain of connected items, each lending strength to the other, and then packed in a box. The beginning and end of the chain relate to the transaction itself.
It is also enlightening for consumers who think that blockchain only relates to cryptocurrency to realize that many experts in the financial community see blockchain as having other and far greater application to banking. To their minds, most of the bitcoin media buzz misses the point or at least doesn’t mention the full benefits to established financial institutions.
And here’s one more definition:
A member of the audience at the Fintech Week in London in September 2015 ask the panel, “Can you define blockchain in one or two sentences?” Panelist Lee Braine, a computer science PhD in the CTO office of Barclays, responded, “It’s a way of chunking transactions into a batch, called a block, and then a way of hashing them with the previous block block to ensure immutability.”
In final practical summary for the average user of blockchain technology, the more you try to define blockchain the more confusing it seems to get. It’s better to just keep it simple. And then suddenly you realize that you really don’t care about ‘the definition’. You understand that it just works and you just want to use it.
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