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What Is a Blockchain?

A blockchain is a massive decentralized and distributed public record of all actions executed throughout a computer network.

We say decentralized because no one part within a blockchain contains critical information that makes that single part irreplaceable. The ledger of a blockchain’s activities is spread across all of its component parts. Nobody owns it and nobody controls it.

We say distributed because the critical information necessary for a blockchain to work is duplicated and distributed instantaneously among all pieces of the network.

The blockchain amounts to a global supercomputer comprised of millions of individual anonymous computers and programs.

How Does A Blockchain Work?

Imagine an Olympic stadium full of people. Around the stadium floor, all sorts of activities are taking place. The curling event is happening in one area; runners are racing around the perimeter; in another area, a long-jump is taking place.

As races and events conclude, everyone in the stadium is immediately required to report the results, AND the status of the entire stadium, in perfect detail. Each entry is scrutinized for accuracy and the ones deemed to be inaccurate are expunged from the record.

Now, imagine that every person in the stadium then uniformly reports the same facts: The last competitor completed her leap at 2:40 pm. The curling event is ongoing. The 50-yard dash finished 33 seconds ago. The family in Row 9, seats A, B, C, and D are eating hot dogs. Everyone throughout the stadium and on the competition floor agrees that these hot dogs are delicious. The consensus mechanism or “virtual lie detector” verifies that everything recorded is true.

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A consensus would reign upon the whole space, as though everyone was connected by a hive mind. Once this report had been logged, the hot dog stand might experience a resultant flood of traffic and the various winners would accept their medals and enjoy the applause from the crowd.

In relation to a blockchain (and how this analogy works), the people who reported the events are the individual computing “nodes” within the blockchain. The lie detector test is the consensus mechanism, which in the blockchain is a cryptographic process for proof that the global supercomputer (the people, all taken together) arrived at the correct outcome in the correct way.

How a blockchain works
How a blockchain works

What Kind Of Application Can Blockchain Find?

So, what if we were able to use the “hive mind” function of our stadium blockchain anywhere, in any way? The blockchain allows people and applications to know what is happening in the world and respond appropriately and instantaneously.

Imagine a blockchain-based program that helps a city stay ready for natural disasters. Say supplies are not arriving at the city’s port in the amounts needed as storm season approaches. A blockchain-based program could detect that shipments are below a particular threshold and automatically notify various supply facilities and vendors to divert needed goods to the city.

Because the blockchain is connected everywhere, the computers that track the QR codes on the stickers affixed to the supplies will immediately know the necessary goods are on their way. City managers can use their blockchain-based emergency preparedness program to then make adjustments in their shipping orders for next year. Next season, shipments will be booked to head into port earlier. Suppliers will be better prepared, resulting in faster relief for the people affected most.

There’s no waiting for some city manager with an astute eye to notice that store shelves are running low, the clouds outside her window look ominous, and get a phone call to distributors; instead, the blockchain has instructions to automatically respond when inbound shipments at the port dip below a certain number.

What Are Blocks and How Are Blocks Created?

It helps to think of each block as a cell that contains the unaltered DNA of the entire blockchain. If you plucked one block out of the chain and examined it, its data would, like DNA, show an encrypted record of the verified block that preceded it, which in turn contains an encrypted record of the block that preceded it, and so on. When a transaction occurs on the blockchain, every computer connected to it “gets the memo.” A cell in Timbuktu knows and has encoded in its DNA that a cell in Nebraska added new data.

To the naked eye, blockchain reads like most computer languages: as a string of numbers and letters. As it grows longer and longer, the system organizes it into a series of blocks of data, one after the other.

Imagine a literal chain of wooden blocks where with each action on the blockchain (like purchases, transactions, contract agreements, record storage, etc.), new blocks are added to this linear chain. The blockchain is constantly growing as these “completed” blocks are added. Each new block contains two items (among others): a record of the latest actions that took place (those purchases, transactions, contracts, and more we mentioned above) and a cryptographically scrambled accounting of the data in the blocks that came before it, ensuring that each new block carries the essential identifying data from the block before.

Computers around the globe act as “nodes” to execute complicated mathematical equations that form the blocks one by one. When they link up, the network they create essentially forms one giant supercomputer. The entire platform is tasked with validating and relaying each transaction/action/contract on the platform before new blocks containing the latest transactions are added.

Blockchain interoperability
Blockchain interoperability

How the Blockchain Ensures Privacy, Honesty, and Equality

Another benefit of the blockchain is privacy. Transactions and transaction amounts can be traced to each blockchain address, but to identify who executed each action, or what was transacted, is nearly impossible. The identity of each actor on the blockchain (be it an individual, a decentralized application an EDCC, an organization, or a group of people) is anonymized behind a complex hash of encrypted code. This allows functions executed on the blockchain to remain both transparent and private because identities are only defined by the record of their transactions and the contents of their accounts.

For any event within the blockchain to be written into the ledger, the whole system must come to a consensus on its veracity. The consensus process requires the agreement of all entities within the system. Referring to the analogy above, for our blockchain’s consensus process to be overthrown, over half the people in our imaginary stadium would have to all lie in the exact same way, at the exact same time, with no record of having discussed it and without any coercion or prep beforehand.

Given that the Ethereum blockchain, at the time of this writing, contains about 24,000 nodes (several times more than Bitcoin), an attack by 51 percent or more of the system is highly improbable, to say the least.

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