The journal of events.
It could contain any kind of data, it is all zeros and ones.
Replacing the mediator with math.
Computers store their data into locations that can be turned on and off. By default they are off, which is to be known as zero. The language of a computer is called binary, it just knows off and on, zero or one. For us humans that is known as a bit. Throw 8 of them together and you've got a byte. Todays computers have a lot of those, that can be used as memory. Bundle a thousand and twentyfour of those bytes and you've got a Kilo Byte of them. Why 1024 and not just 1000? Well, because computers work with binary as a language, they also do mathematics in that manner. And as every bit of computer memory has 2 possible states the power of two mathematics is used to calculate the amount of possible states of a bunch of bits. Take for instance 2 bit, they can both be off, either one can be on, or all can be set to on. That gives 4 different switch settings, or 2 bit times 2 settings equals four. And that is the same as 2 to the power of two. So 3 bits make 2 to the power of 3, or 2x2x2=8. And so on and so forth.
Blockchains are blocks filled with a lot of bits of data. To a computer they are just zeros and ones and it can handle those very well. It can be programmed to do all kinds of complex mathematics with those bits in there. Where we humans need some kind of translator to show us what it really means, all these bits. That is done trough interfaces that are translating the language of the computer to one we understand and the other way around. And if we create information that can be put stored as data into the memory of a computer. In a way that we can get it back when we need to. On way to do this is by using a so called database. Where all the information is getting recorded in such a way that it is very easy to retrieve it again, or change it, add more and also delete some. Some companies like Google have made it their speciality to store websites and so on in their databases, so humans can find things very fast and effective on the world wide web.
Those kind of databases are private, the company ownes them, controles them and decides what gets in, what gets changed and what goes out. Some other known brands that use databases in that way are for example Facebook and Twitter. But, the data is all privately owned and centraly controlled, according to the rules the private company sets. Our money system works in similiar way. Banks have one system that uses databases that are centraly controled and privately owned. They use their databases to record all our financial transactions. And we have to trust all those private companies to do this to the best of our interest, after all, customer is king. But the banking crises of 2008 showed us that this system has its flaws. So, how to make an alternative to this centrally controled systems? A system that cuts out the human intermediate?
Complex mathematics and computers.
In 2009 the solution came, quite unexpectedly, known by the name of BiTCoin {BTC}. It was called a trustless system, that could move transactions at lightspeed all over the world, using the internet for transport. And the key for securing these transactions was cryptography, a very complex form of mathematics. This replaced they intermediates, like banks...! A mystical figure by the name of Nakamoto Satoshi had written a paper about it and programmed the application for it. The system would broadcast transactions to a peer to peer {p2p} network of Bitcoin computers and combine them into blocks of data. And then every computer, that was fast enough, could try to solve a very complex mathematical cryptographic puzzle, to proof it secured the right block of data. A block that was filled up with Bitcoin transactions, journal records of values in and values out. The goal was set to find the right solution within 10 minutes on average.
Once a solution is found the result comes in a very huge number, called a hash. This is a unique number that identifies that block of data. Computers that try to solve the puzzle for a block of data are called miners as the dig for a reward, while doing so. The more hashes per second they can do, the better chance they have in winning the reward in Bitcoin. But, the more computers join in the mining, even forming pools, the harder it will be to find the right hash solution. This difficulty is set as a rule that the resulating hash code needs at least a couple of bits that are zero, at the front. The more zero bits that have to be at the front of the hashcode, the harder it gets to solve the puzzle for a computer. It is called the difficulty to find the unique hashcode for a block. But because Bitcoin became thousands of US Dollar in worth, there was enough reason to keep mining for the current reward of 12.5 BTC per solved block puzzle.
But what makes it a Blockchain?
The first block of data ever to be mined is a called a genesis block. This is the start of the blockchain. And the unique hash this block created is also used in the next block calculation. And in this way all the following blocks get interwoven with the previous ones, to be traced back all the way to the genesis block, the one that started it all. In all these blocks are records of transactions stored and they are exactly copied to all computers that are connected peer to peer network. And the longer the blockchain gets, the stronger it gets secured. Because if some malafide organisation wanted to attack it, it would have to do all the complex calculations over again and get them accepted by the complete decentralized network. This would need such extreme computing power, that it would be useless to even try to enforce it. And still the network would need to accept this changed blockchain. So, this kind of database, called blockchain, is not owned by anybody and is shared by everyone. It is also known as a public ledger.
The sourcode of Bitcoin was released under a Free and Open Source license. So anybody could use it, improve it and start an different and unique blockchain of their own. All these so called forks together became known as crypto currencies, or cryptos for short. At the moment of writing the worth of all these cryptos is close to a hundred billion US Dollar. Not bad for a bunch of zeros and ones bundles in blocks of data that are interwoven with each other to form a trustless highly secure blockchain. Where it even creates its own crypto while a new block puzzle has been solved and the chain was made longer and stronger. And because the zeros and ones in a computer do not really care what they represent new applications came, that used the decentralized blockchain system for more than just financial transactions. Any data could be stored, shared and secured that way. And one of those applications makes it possible to for me to post this article, because Steem is blogging on a decentralized blockchain. While SteemIt dot com is one of the possible interfaces to interact with it, just like the eSteem App.
More to come...
One of them is EOS, that is taking the blockchain technology to a whole new level. It can be expected somewhere in the summer of 2018 to go live. This innovation will be able to run many applications on its blockchain system. Things like Bitcoin could run on it, but also Steem, Bitshares and so on. It is like the first computers had one processor at first. And it could do some simple math. But these days we have mobile phones that can have up to 16 processors all working at the same time on a complex calculation, for instance. Well, EOS is like that, but then in Blockchain technology. Where Bitcoin, for example, is running on one processor, EOS can have in run on multiple ones, even on multiple computer networks, with computers that have multiple processors. That means fast and growing to enormous scales. We've only just begun and have seen nothing yet.
Hopefully I was able to explain some of what is know as the blockchain. Some aspects of it I did simplify to keep it digestable. The year 2017 I thought to be the breakthrough for blockchain technology into the mainstream and I guess it is going to get a lot of news coverage in the upcoming months.
Have a great one!
A Bitcoin/Vertcoin fork called Mundo, running on its own unique blockchain.
screenshot cc-by-sa
