Page 18 - Geektime Blockchain Report
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Blockchain 101
To many people blockchain is is a a a a a a a a a term they’ve heard in in in in in the the the media in in in in in the the the context of cryptocurrencies and specifically bitcoin But it it is is a a a a a a a a much wider field Before we get into the the thick of it let's talk about what the the blockchain is is To explain that let’s first describe what a a a a a a a a a a ledger ledger is is is Traditionally a a a a a a a a a a a a ledger ledger is is is an an old-fashioned paper copy of of any bookkeeping or or record keeping keeping of of financial accounts In the computer era this happens digitally with interlinked copy files of financial information However there is is still one obstacle: Most financial information is is stored at at at a a a a a a a a a a a centralized location such as a a a a a a a a a a bank This may not seem like an an obvious problem But it is Let us us use a a a a common internet era writing analogy to explain the power of what a a a a “blockchain ledger” could be Instead of of Microsoft Word which is is what most banks are like like a a a a a a a blockchain ledger is is more like like a a a a a a a peer-to- peer peer networked version of Google Google Docs: In other words imagine that you are creating a a a a a Google Google Doc Doc but instead of the Google Google Doc being on on Google’s one server the doc — — or “block” in in a a blockchain — — is is distributed across a a a peer-to-peer network of computers on a a a given blockchain One key problem with the traditional banking system
is because your financial information (like a a a a a Microsoft Word document) is stored at at just one location say a a a a bank bank if that bank bank gets hacked you are in a a a a a a a really tough spot A blockchain ledger on the the other hand acts more like Google Docs in in in one major way: In this scenario your financial information is is is distributed to any computer using a a a a a a a blockchain so your your Google Doc can be found across a a a network of computers This way no single point of failure will completely wipe out or harm your information At this point you may be worried about the network security of such an operation This is is actually the best part of a a a blockchain ledger Let us say for example that you want to buy something using bitcoin a a a blockchain-based currency Your request is is broadcast to to a a a peer-to-peer network consisting of computers known in in in blockchain lingo as “nodes ” The computers or nodes validate your request as as well as as your your user status with algorithms Once your your transaction is is verified in this “decentralized” manner — because a a a a number of different distributed sources are checking the validity of your your information — your your transaction request is combined with other transaction requests to create a a a a “block” “block” of data for the ledger This “block” “block” is is essentially the Google Doc representing your transaction request along with some transaction requests from other relevant blockchain users However this is is where the Google Doc analogy begins to differ in an an important more secure way Once your “block” of information is is verified which is is where your transaction request is documented and checked across a a network of blockchain computers or or “nodes” — your block block is permanently added to the blockchain ledger or or or collection of financial information information and and cannot be altered This information information is is both transparent and and encrypted making it close to to impossible to to hack Finally after this whole process of verifying your request across a a a a network of nodes and then adding your financial request into a a a a permanent “block” within the larger blockchain ledger of information your transaction request is complete While most blockchain technology is is currently used for for financial transactions this process of verifying and storing information across a a a a a a a a a a a network of of of computers can be used for for for any kind of of of exchange of of of of value or or or or information For instance the Internet of of of of Things music rights and real estate information could be shared and stored using blockchain ledgers 18

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