Ask someone to kindly explain blockchain

[guinea36]

I hear about it everywhere - about how it’s going to shake up the works etc.. Tried googling it but still none the wiser! Could someone tech minded explain it in simple terms..?

Blockchain is decentralised security.

It's a chain of blocks, each containing information. It's a write-only distributed ledger with many copies spread across many users.

The block has a has, data and a hash of the previous block (hash is unique identification 'number' of the block and the data inside). The data depends on the type of blockchain. Cryptocurrency built on blockchain might have payer, payee and amount.

The hash (identification number) will change if data in a block is changed. As each block contains the hashes of the preceeding block, if data is changed, all following blocks will know.

Is it going to "shake up the works"? Not that quickly. There are applications for decentralised applications, for example. Personal ID or ability to prove your credentials is a clear use of the tech.

Really though, I suspect it'll be a footnote in new tech.

It's a distributed ledger, basically a list of data that everyone has a copy of.

Imagine an island on which 3 people live. Rather than have a bank look after their money, they instead decide to use their own currency and call it islandcoin (IC). The simplest solution would be for one of these people to have the list of every transaction and add to it when someone wants to transfer money from one person to another. So the list would look like:
1st April Alice starts with 10 IC
1st April Bob starts with10 IC
1st April Charlie starts with 10 IC
2nd April Alice transfers 1IC to Bob
3rd April Charlie transfers 2IC to Alice

This is the essence of the blockchain, a list of data.

The problem is however that the 3 people don't trust each other and think that whoever holds the list will just put up fake transactions and steal all their IC.

So instead they decide they will all hold an identical copy of the list and only agree to add a transaction to it if 2 or more out of the 3 agree (50%+ of the participants) that both the transaction is valid. (If it required 100% then essentially one person could veto all transactions, and if it only required one then they would be in the same position as before).

This is what is known as a private blockchain, with a limited number of pre-approved participants.

Crpytocurrencies are public blockchains, meaning anyone can join and run the software. The problem now is that someone could make run the program simultaneously to get over the 50% threshold and steal everyones money. To stop this "mining" is introduced, which essentially means you have to solve a very difficult and pointless problem on your computer, before any data is added to the blockchain. In the case of Bitcoin this has quickly grown to requiring the energy of a medium sized country, to process a small number of transactions per day.

I'm skeptical that Blockchain will be used in more than a few highly niche areas. It's not actually a new idea, it's been around in slightly different formats for decades, yet no one uses it because it's a very inefficient database, hence only usable in quite unique circumstances.

Personal ID or ability to prove your credentials is a clear use of the tech

Although it's not, since one of the requirements of an identity solution is that errors can be corrected, so write only solutions are not feasible.

Blockchain is a state machine and as such can perform operations on data itself.

This is how smart contracts work. You set up some preconditions, along with an action (or actions). If/when those conditions are satisfied, the action(s) are performed.

All else is incidental ...

@sirfredfredgeorge

The Estonian government seem happy enough with their decade-old solution.

God I feel so old and past it reading that. I don’t understand a bloody word of it... and twenty years ago I was a software engineer installing networks all over the U.K. 😫😫

The Estonian government are decades ahead of the UK. It's entirely possible the UK will never catch up.

@DGRossetti

Is it you who codes in Solidity in their day job?

I'm right in my understanding that blockchain is / can be / may well be very useful in proof of credentials, aren't I?

Is it you who codes in Solidity in their day job?

Amongst other things

I'm right in my understanding that blockchain is / can be / may well be very useful in proof of credentials, aren't I?

You can establish trust using blockchain, yes. A lot of legal minds are looking into using blockchain for providing trust in matters like land registration, and similar.

But until the fog of cryptocurrencies clears, there's a bit too much noise and not enough signal in the real world.