Blockchain is a buzzword that you might have heard a lot, but what does it actually mean? How can you explain it to someone who has no technical background? In this article, you will learn how to make blockchain simple by using analogies, examples, and basic concepts.
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Blockchain is a system of storing and transferring information in a secure and transparent way. You can think of it as a ledger or a record book that is shared and updated by many different parties, without any central authority. Each page of the ledger is called a block, and each block contains a summary of the previous block, creating a chain of blocks. This chain is verified and protected by cryptography, which means that no one can tamper with or falsify the data.
Blockchain enables trust in a trustless world. It is a trust layer over the internet. Consider creating a bank account. An institution like a bank verifies your credentials (driver’s license), validates your background (own a house, where you work, etc.), and, if satisfied that you are trustworthy, creates an account for you and records it on a central database. In this case, the bank is a centralized intermediary. Blockchain infrastructure can do the same with its smart contracts: it can mediate trust by verification, validation, and recording on an immutable distributable ledger. With these blockchain capabilities, you can build autonomous self-sovereign systems and innovative decentralized applications that are inclusive to everyone…
A blockchain is a shared database, with entries that cannot be deleted. It is typically connected to via the internet. Its integrity is protected by many independent servers having to agree on changes. Its availability is protected by many copies of it running and keeping themselves synchronized. Some blockchains also have distributed computation abilities - so business rules can be baked into the database. Many blockchains are global, so resilient even in the face of natural and geopolitical events.
How I explain Blockchain to my grandparents:
Imagine the Internet, but for transactions. Imagine a very big digital accounting book, visible and verifiable by all visitors. Imagine your wallet is your entry pass, your profile. Imagine no single entity/person has the decision making or control of the data.
Blockchain is like a digital diary that everyone can write in, but no one can erase. It's a revolutionary way of recording information, ensuring that once something is written, it stays there forever, transparent and unchanged. The beauty of blockchain lies in its ability to maintain a trustworthy record of transactions without the need for a central authority. This decentralized approach not only enhances security but also promotes transparency and trust among participants.
A blockchain is, quite literally, a digital chain of blocks, with each block storing information. While there are many flavors of blockchains, this basic concept remains the same. The chain is distributed, meaning there isn't a single point of failure. However, blockchains can vary widely, from being very centralized—controlled by a few—to being highly decentralized. They can also range from being prone to censorship to being censorship-resistant.
Blockchain has many applications and benefits for different sectors and industries. For example, blockchain can enable faster and cheaper transactions, without intermediaries or fees. Blockchain can also improve trust and accountability, by creating a permanent and public record of transactions, contracts, and agreements. Blockchain can also empower individuals and communities, by giving them more control and ownership over their data and assets.
Decentralization is a global trend and blockchain is one of the technologies that enables it. By combining blockchain with edge computing, organizations can create more secure, transparent, and efficient systems for processing and managing data at the edge of the network.
Blockchain is super useful because it makes transactions quick, cheap, and secure without needing a middleman. It's like a public diary where everything written is permanent, helping everyone trust each other more. Plus, it gives people more power over their own stuff, like money or information, making everything fairer and more open.
Fast and cheap transactions: Removes intermediaries, streamlining processes and reducing costs.
Enhanced transparency: The public and immutable record of data promotes trust and accountability.
Empowerment: Gives users greater control over their data and assets.
Wide applications: Beneficial for finance, supply chains, voting, digital identity, and many other sectors.
Blockchain technology is particularly useful because it enhances TRUST, SECURITY, and TRANSPARENCY in a decentralized manner.
These features make blockchain a powerful tool for various applications, from financial services to supply chain management, and beyond.
Blockchain is an efficient facilitator in commercial, financial relationships and other use cases susceptible to its implementation, subject to the fact that when a third actor appears to mediate so that the parties can reach an agreement, blockchain emerges as a technology capable of offering negotiation environments and trust given its characteristics and technical models so that through the Internet you save efficiencies and costs in the activities of that intermediary. Also because of how new the technology is, use cases will need bases to prove their real relevance and usufruct. Currently, we are in the beginning phase and the sector susceptible to this is the financial sector, but in the future other sectors will join the process.
Blockchain works by using a network of computers, called nodes, that store and validate the blocks. Each node has a copy of the entire blockchain, and they communicate and agree on the state of the ledger. This is called consensus, and it ensures that the blockchain is consistent and accurate across the network. When someone wants to add a new block to the ledger, they have to follow a set of rules, called a protocol, and solve a complex mathematical puzzle, called a proof of work. This process is called mining, and it rewards the miner with a new block and some tokens.
Blockchain is like a team game where everyone keeps the same scorecard. Each player (or computer) holds a copy of the scorecard (the blockchain), and they all agree on the scores (transactions) to make sure everything is fair and correct. To add a new score, a player must solve a tricky puzzle, proving they’ve done the work. This is called mining, and it helps keep the game honest while rewarding the solver with a prize, like new digital coins.
Blockchain is like a digital ledger that’s shared across many computers. These computers, known as nodes, hold and check the information in the ledger. They all have the same copy and must agree on any changes, which keeps everything consistent and correct. To add new information, called a block, there are certain rules to follow. Part of this involves solving a tricky math problem, and when someone does this successfully, it’s called mining. Mining earns them a reward in the form of a new block and some digital coins.
In simple terms, think blockchain as a big digital puzzle that's shared among lots of computers. When someone wants to add a new piece of info, like a transaction, they create a block. This block gets verified by the other computers in the network and then added to the chain of previous blocks. Once it's in there, it's like it's set in stone – no one can change it. So, every time a new block is added, it creates a permanent and transparent record of all the transactions. It's like a digital teamwork that keeps things honest and secure!🤩🚀
En la actualidad también existen otro tipo de protocolos que en lugar de funcionar por prueba de trabajo (POW), funcionan a través de prueba de participacion (POS). Estos nuevos protocolos aun considero que están siendo puestos a prueba (ETH lleva varios meses funcionando con POS) y como todo en este mundo, tienen ventajas y desventajas, pero una de sus principales ventajas es el ahorro energético y de hardware necesario para poner a funcionar el nodo. Es importante destacar que mientras mas nodos haya en la red, mas seguridad se le esta aportando a la blockchain, yo creo que los protocolos POS tienen también una ventaja ahi por requerir una menor inversión para la puesta en marcha de cada nodo.
Imagine a big online book where everyone writes down their secrets, but instead of pages it has magic blocks. Each block keeps the secrets of the previous one, as if they were chained together and the best part! There is not just one book, everyone has a copy! If someone wants to change a secret, he must convince everyone who has the magic book. Impossible to cheat! Now the magic to unlock the information in the magic blocks is called code+algorithms when put together they produce smartcontracts which is how the magic blocks operate, in the magic world of the blockchain it is like a game of magic detectives , where everyone verifies the information.That's how Blockchain works, a technology that stores information securely and transparently.
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4What are Tokens?
Tokens are units of value that are created and exchanged on a blockchain. They can represent different things, such as currencies, assets, services, or rights. For example, Bitcoin is a token that is used as a digital currency on the Bitcoin blockchain. Ethereum is another token that is used as a fuel for running smart contracts on the Ethereum blockchain. Smart contracts are self-executing agreements that are coded on the blockchain, and can perform various functions, such as escrow, voting, or identity verification.
Tokens are like digital tokens at an arcade. Just as those tokens can be used to play games or get prizes, blockchain tokens can represent all sorts of things: money, property, or even a vote in an election. They work on blockchain technology, which keeps everything fair and secure. Tokens like Bitcoin are used as money, while others like Ethereum help run special programs called smart contracts. In short, tokens are versatile digital tools that can do a lot more than just buy and sell.
Tokens are like digital coins or certificates that represent ownership of something valuable, such as a cryptocurrency, a digital asset, or the right to access a service or participate in a community. They're used within blockchain networks to facilitate transactions and interactions, just like how physical coins or tickets are used in the real world.
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5What are the Challenges of Blockchain?
Blockchain is not a perfect solution, and it faces some challenges and limitations. For example, blockchain can be slow and inefficient, due to the high amount of computation and energy required for mining and consensus. Blockchain can also be complex and difficult to use, due to the lack of user-friendly interfaces and standards. Blockchain can also be vulnerable to attacks and errors, due to the human factor and the evolving technology. Blockchain can also raise some ethical and legal issues, such as privacy, regulation, and governance.
I find that it still have to overcome the following challenges:
Privacy Issues: The transparency of blockchain means that every transaction is visible, which can raise privacy concerns.
Regulatory Uncertainty: The lack of clear regulations can hinder blockchain’s adoption and create compliance challenges.
Limited Talent Pool: There’s a shortage of skilled professionals who understand blockchain technology, which can slow its development and adoption.
High Energy Consumption: The mining process, especially in proof-of-work systems, requires a lot of energy, which raises environmental concerns.
Complex Integration: Incorporating blockchain into existing systems can be difficult due to its complexity and the need for new infrastructure
Blockchain technology,although very useful,still has some challenges to overcome Scalability:Because the magic book is so big,it is sometimes difficult for everyone to read and update it at the same time. Solutions are being sought to make information flow faster, this makes transactions more expensive in some networks at their peak of use.Regulation:As it is a new technology,governments do not yet know how to regulate it.Laws need to be created that protect users and encourage innovation Understanding:For many,Blockchain is like a foreign language in complex transactional environments that limit its adoption and prevailing need for user-friendly UX.More educational tools and resources are needed so that everyone can understand its benefits
It’s and auditable, trackable and decentralized value transferring system.
This means that no authority or entity has power over it. And the main focus is in complete transparency of the system and its users.
Além dos desafios e limitações mencionados, a imutabilidade das transações no blockchain dificulta a ação de governos contra malfeitores, pois uma vez registradas, as transações não podem ser facilmente alteradas ou removidas. Além disso, em uma rede 100% online, onde os validadores estão sempre conectados, há o risco de que, caso esses validadores desistam de validar a moeda em blockchain, a rede possa congelar, tornando a moeda inutilizada. Esses são aspectos importantes a serem considerados ao avaliar a viabilidade e segurança das aplicações de blockchain no mundo financeiro.
Blockchain is like a group of friends tracking debts on identical copies of a paper: every transaction is recorded and shared among them. This decentralized ledger, unlike a single-owner notebook, is tough to alter without everyone noticing, ensuring security. Beyond cryptocurrencies, it's used in supply chains, identity management, and voting.
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6How to Learn More About Blockchain?
Blockchain is a fascinating and evolving technology that has the potential to transform many aspects of our society and economy. If you want to learn more about blockchain, you can start by reading some books, articles, blogs, or podcasts that explain the basics and the trends of blockchain. You can also join some online courses, communities, or events that offer more in-depth and interactive learning opportunities. You can also experiment with some blockchain platforms, tools, or projects that allow you to create and use tokens, smart contracts, or applications.
Diving into the world of blockchain can be really exciting and rewarding. To truly grasp it, start with the basics through easy-to-understand resources like YouTube videos or introductory articles. These can demystify the jargon and give you a solid foundation. Once you've got the hang of the basics, engaging with online communities or forums can be incredibly beneficial. Here, you can ask questions, share insights, and learn from real-world experiences. To get hands-on, try out some blockchain simulation tools or contribute to open-source blockchain projects. This practical experience will deepen your understanding and might even spark your own innovative ideas.
5 or 6 years ago there were not as many educational resources as we have now and this change in trend is due to the fact that universities and accredited centers have in some way ventured into the teaching of technology.However, empirical learning predominates, which makes its approach more fascinating, but at the same time there are risks due to the financial speculative stage in which we find ourselves. Personal learning,go to events, join communities and invest in quality continuous training, there are programs academics on very good quality exchanges like Binance and Bit2Me if you are in your first stage, for companies look for those people who can demonstrate their expertise and add value to your product, this is technology in the end.
Existem vários livros excelentes sobre blockchain, mas um que é frequentemente recomendado é "Blockchain Basics: A Non-Technical Introduction in 25 Steps" de Daniel Drescher. Este livro é projetado especificamente para leitores não técnicos e fornece uma introdução acessível à tecnologia blockchain, explicando os conceitos fundamentais em 25 passos simples. Ele aborda uma ampla gama de tópicos, desde o funcionamento básico até as aplicações práticas, sem favorecer uma plataforma ou criptomoeda específica. Deve-se tomar cuidado com leituras onde o autor não é crítico em relação aos problemas que uma moeda em blockchain podem ocorrer.
Check out the IOTA Tangle which has the same properties and benefits of blockchain but without the disadvantages. For example there are no miners nor blocks so no electricity and so speed is very fast and gets quicker as transactions are added. Furthermore each transaction is FREE as the IOTAf oundation is a not for profit.
Blockchain is like a giant notebook everyone can write in but can't change what's written. Different blockchains like Bitcoin and Ethereum work differently. Blockchain isn't just for digital money but can track goods and contracts too.
Uma história a ser lembrada sempre que vemos novos projetos de blockchain é a da moeda RaiBlocks (agora Nano), que viu um aumento meteórico de valor, alcançando o top 20 em market cap das moedas em blockchain negociadas no mundo. Seus fundadores operavam uma exchange exclusiva, onde investidores podiam trocar Bitcoin por RaiBlocks, com a promessa especulativa de que este seria um grande projeto. Durante um período de alta demanda especulativa, a moeda subiu mais de 50x em poucos meses. No entanto, no auge do sucesso, a exchange enfrentou problemas e parou de negociar a moeda, deixando investidores incapazes de retirar seus fundos. Isso destacou os perigos da governança centralizada em sistemas blockchain.
Blockchain is a demanding technology, it has many learning verticals,code development in its different languages, mathematics, algorithms, DLT programming logic,infrastructure,gaming,DeFi, trading, community,marketing project development, startup, economics,finance.If you don't want to understand everything, go step by step, but above all understand that sooner or later your future DAPPs and your relationship with money will end up using Blockchain or DTL whether you want to or not. The sector is full of gurus and social networks, there are more of them all, they are all experts, the best thing you can do for your learning is that, train at your own pace,take care of your money and that of your company, do not speculate. Learn and research.