If you are a Steemit user, you probably heard the term "Blockchain" once or twice. In this post, i will explain what is Blockchain and how it work in the most easy way that any new Steemit users can understand.
Blockchain simply is just a technology software that do a certain thing. just like Dropbox, your computer virus software, game software ... it is just another technology software.
But to understand what make this technology such a big deal and why we name it Blockchain. We need to take a look at why it was created in the first place and how it work.
Let say you and to send $5 to Lisa (your friend), you create a request for your bank. The bank then verify your and Lisa account and process the transaction. these process usually take few days and with a fee.
Now, Block chain created to solve these problem.
First, Blockchain allow you to make the transaction directly from you to Lisa without any third party such as the bank.
Second, the speed to process the transaction will be only few minutes instead of few daysÂ
Third, the transaction fee will be way smaller compare to the bank.
Think of Blockchain as a machine that have these feature in it. But in order for a machine to work, it will required fuel to run, and this is where Bitcoin and other cryptocurrency coming. they were created as fuel for this giant machine.
Here's how this machine work:
You deposit 10 Bitcoins into your account. The system then will create a "Block" contain information of "you deposit 10 Bitcoins into your account"
Now you send 5 bitcoin to Lisa, the system will create the second Block contain information of "you send 5 bitcoins to Lisa" and also create a "Chain" that link this second block to the first block above.
Lisa then send to her friend Nike 2 bitcoins, the system will create the third Block contain information of "Lisa send 2 bitcoins to Nike" and also create another "Chain" that link this third block to the second block above.
as transaction occurs, new block created to record them and "Chain" to previous block to make sure all transaction are correct. This concept is call "Open Ledger"
Now you see why we call this Blockchain (Block to store our transaction info while chain connect all transactions to make sure they are accurate)
This is the basic of how Blockchain work.
let go in a little deeper.
when you send money from your bank account. The bank will verify your transaction to make sure it's accurate, so who will verify your transaction in the Blockchain?
Have you heard of Bitcoin miners?
When you send Lisa 5 bitcoins, thousands of miners will try to solve a complicated mathematics problem to find a special key for your transaction. Then this key will be send to thousands of servers to verify that it is the right key (only one key per transaction). after the key was verified, a block will created to store your transaction between you and Lisa and "chain" this new block to the previous block.
Out of thousands of miners, only the first one that find the correct key will win and reward with a certain amount of bitcoins.
All of these happen within few minutes and the new change will be updated to the entire public network so everyone can see that you send Lisa 5 bitcoins. But don't worry, what everyone see will be just a bunch of numbers an letters not your private information.