What is Blockchain?

You’ve probably heard the word “Blockchain” before. But what actually is a “Blockchain”? A very simple explanation: Blockchain is essentially a novel way to VERIFY digital records as correct. Think of your bank balance on your banks mobile app. Say it shows $10,000 in your account. It isn’t physical cash in your wallet….so how do you know that money is real? The simple answer again is, because you trust your banks records. The server of your bank has a digital record that states that you own $10,000 of electronic money. Because your bank is a trustworthy record keeper, you are able to purchase items with this electronic money. What if you managed to hack into your banks secure server and add some zeroes to your bank balance to make yourself a millionaire? In theory it could be as simple as changing a single digital record on a server. Obviously this is an oversimplification, but it exemplifies the bank as a single point of failure in the system. The electronic record banks keep of user balances and transactions is called a ledger. The weak point with banks is there is only a single copy of the ledger! So what is a system that doesn’t rely on a single bank server to verify digital money transactions? Enter - Blockchain. Blockchain is a system where rather than a single ledger of customer balances, there are multiple copies hosted on independent parties computers. If single copy gets hacked, or one computer goes down, it doesn’t matter, because there are backup copies distributed across the world. Imagine a million computers, all owned by independent people, with identical copies of the same ledger. If one of the people tries to falsify their copy of ledger, it doesn’t matter because the network of a million other copies are true. The system is very difficult to break or hack as the number of copies grows. The computers that hold the copies of the ledger determine what valid changes can be made to the ledger, by checking a majority of the network agrees, before updating the ledger. There is no bank involved in this system, only a network of independent computers owned by private individuals. This is a distributed ledger, which is the core technology behind blockchain. Blockchain can be used to store any digital record - with applications beyond finance. Interested in learning more? We’ve built a Blockchain learning platform where we guide you through the motions on our integrated learning sandbox - where you make real blockchain transactions alongside learning concepts.