What is blockchain, and what are its main characteristics?
Welcome to the wild world of blockchain, where the only thing more confusing than the technology itself is trying to explain it to your family. But don’t be afraid, I am here to try to guide you to through this misunderstood and beautiful technology…
What is a blockchain?
Think about a decentralized and distributed database that is used to store transactions/data into blocks. The blocks are linked and secured together using cryptography, they form a chain that we call blockchain (easy right?).
Now, picture the fact that a blockchain is also an open source software that anybody can install and run on a computer. The blockchain does not see, does not think, does not interpret things, it is an open tool that creates and validates blocks according to a consensus.
A consensus, is a set of rules within the blockchain allowing participants to validate blocks and to insure their integrity, the two famous consensus are Proof of Work and Proof of Stake (ok, but who is in charge of running the consensus, what is there is something wrong or something to be updated?)
The blockchain has a governance system composed by all the actors who contribute to the blockchain. Upgrades can be proposed by these actors, those propositions are discussed, voted then implemented by the community according to governance rules. (alright, but who are those people and why they are doing it? Who’s paying them to do it?)
Anybody can participate in the network, it is open. To make it simple, there are financial incentives to participate and to behave well into the ecosystem, when an actor validates a block approved by the network, the actor receives the coin of the blockchain (on the Bitcoin blockchain, a miner who validates the blocks will receive bitcoins as a reward, this is how the actors are being rewarded to participate and maintain the blockchain).
To make it less conceptual, let’s go through the main characteristics of a blockchain…
What are the main characteristics of a blockchain …
The following characteristics are important to understand the potential of the technology and its potential. A blockchain is:
A blockchain is not controlled by a central entity. Instead, it is secured and maintained by a network of computers run by Humans that we can call a “community”.
- Distributed :
The entire history of a blockchain is stored and maintained on multiple devices or locations (called nodes) around the world (13,000 nodes for Bitcoin in 2022).
Once a block has been recorded on the blockchain, the transactions within it cannot be updated, canceled or removed. It will stay into the blockchain forever. There is no going back or CRTL+Z in blockchain.
Cryptographic techniques are used to secure the transactions and the blocks recorded on the blockchain. A decentralized blockchain cannot be hacked.
All transactions recorded on a blockchain are visible to all members of the network (you can see them here, for example). A blockchain can be audited and verified by anyone, anytime.
The book analogy…
To finish this article, I would like to do an analogy of the blockchain with a book.
Each page is filled with sentences (transactions), that anybody can write at the same time.
All the chapters (blocks) which contains the sentences (transactions) are validated within in a defined period of time.
When a chapter (block) is validated and added into the book (blockchain), the sentences (transactions) cannot be updated or changed and are accessible to anybody who wants to read the book (blockchain).
The book (blockchain) has an infinite number of chapters (block). The actors in charge of validating the chapters (blocks) are getting rewarded to do their job.
Pages after pages, chapters after chapters, the book becomes more and more interesting, robust and secured….
Let’s use this technology to write a better human history, a decentralized, accessible, transparent & uncensored history, chapters after chapters, blocks after blocks….
PS: A lot of concepts has been reduced, simplified to explain the big picture. Complementary articles will be written to get into more details.