Many of us have been hearing about bitcoin this, bitcoin that, all over the internet, we heard about blockchain even cryptocurrencies on daily basis, but we have no idea about the really details, some read and read, yet they didn’t understand why some engage in it without really knowing what they are doing. Have been receiving this question almost weekly about what really is this blockchain all about, maybe it is because of this business (Million Money) which is now circulating all about and to me it is classified in the pronzi category but somehow they started using Ethereum as a means of payment, so this really brought up lot of questions from new members who have no idea about what blockchain is all about. Let make this in a simple way so all can understand.
Let say you have a friend who went on a journey but unfortunately for him, he over spend and was in need of some cash, so he called you to help him out and immediately you call your account manager to send let say $500 to him immediately. The manager sent it and wrote it down in a record book to keep track of the transaction for future purpose and immediately you call your friend, that you already sent the money. Let calm down, what just happened, you send money to your friend through a third party right because you trust the manager and everything need was just a record to keep track of what just happened but come to think of it what if
the record got burnt or stolen
what if the manager decided to be unfaithful, didn’t send the money but record it, or he recorded more than what he sent. Even if you not to know what will you do, nothing because it is already written and you aren’t incharge of the record and you cannot control it. That is what actually brought up the idea, is there a way we can perform transaction and still keep record of it without involving any third parties.
That is where blockchain came into existence but how, ok let view it in a simpler method. There are groups of people who decided they don’t need a third party but what to keep track and maintain this register on their own without having Knowledge about each other identity but on a mutual agreement. We need at least three people but I will be using 10 people to illustrate this.
10 people came together to keep track of each other transactions, everyone has an empty folder, which make it 10 empty folder. Also, everyone one have a blank paper and a pen to record each transaction that will occur. Now imagine number 3 want to send let say $5 to number 8, number 3 will make the announcement, everyone will check if number 3 have enough balance to make the transaction to 8, if yes, everyone will write it down in the blank paper, on a particular date, number 3 transferred $5 to number 8. That is one transaction. It keeps repeating on and on and everyone keeps writing it down.
Let say a blank paper can only contain 10 transaction, so when it is up to 10, there won’t be any space again, so they drop the already filled paper inside the empty folder, then take another blank paper. They keep repeating this process. Before putting away the filled page, it has to be sealed with a unique key which everyone agrees on. This sealing will prevent anybody from changing what is inside the page once it is in the folder. Once sealed, it can’t be changed at all. If everyone trusts the seal, everyone will surely trust the content in the page. How is this seal generated, or how do they come about this seal (topic for another day so as not to make it too complex). The seal is made through hash which generate a unique key (sealing number) which is used to seal up this page. Once the page is filled up, everyone starts calculating the sealing number and the first person to get it will announce it to others who they verified it, if it brings out the required output, if yes, everyone one will seal the page with this number and put it in their folders.
Oh, we know at times, we can’t predict humans what if something happen, a mistake or someone decided to go against others just to satisfy his one need or made a mistake, what will happen. The sealing number decide upon by the majority is the number that will be use after verification, so he has to discard his page and copy from another and put it in his own folder, if not, he won’t be able to continue with the network since he didn’t have a sealed page in his folder. So no more transaction for him, which means he is out. You might also be asking since someone can calculate the sealing number, why can’t other sit back while only one person do the calculation. This part is where the reward comes in, yes there is a reward for the one who calculate the sealing number first. So this will surely allow others to do the calculation as well. Bitcoin was the first currency that existed, so people receive reward in bitcoin, the more people have it, the more it grows in value, and the more people keep having it the more it keeps growing, on and on. So once the page is put inside the folder, they bring out a new blank page and the process continues on and on again. The block of transaction is the filled pages and the folders serve as the chains which contain the block.
This is the simplest way I can explain what blockchain is all about, there are lot of things I will talk about in the second part, how the sealing number is been calculated, what will happen of someone or people decide to go against it, what happen if someone modifies the transactions. Stay tuned and stay safe.