Introduction to Blockchain technology
Blockchain is fast becoming part of daily conversations. But how does it work? Where did it come from and what’s the benefit?
In my first post on this exciting topic, I’ll answer these questions for you.
Let’s dive straight in:
BACKGROUND:
In order to understand blockchain, let’s first understand a little on its origin and creator-
Blockchain origin
Did you know that blockchain tech actually dates back to the 1990s?
In 1991, Stuart Haber and W. Scott Stornetta created a cryptographically secure chain that essentially protected content from being tampered with by using a concept called “timestamping.”
Then, in 2008, blockchain began gaining relevance when the elusive Satoshi Nakamoto built the first application using blockchain technology (Bitcoin).
Who is Satoshi Nakamoto?
The true identity of Satoshi Nakamoto has never been verified, but, speculation is rife. It’s been claimed that Satoshi is an individual in Japan to a whole group of people. Whoever Satoshi is, I doubt we’ll ever find out who created Bitcoin.
However, one of the main tenets of Bitcoin is that it’s decentralized- that no one company, entity or person controls the Bitcoin ledger. This is likely the reason Satoshi has remained anonymous- to uphold the system of decentralization.
So, what is blockchain?
Essentially, blockchain is a secure way to record and verify transactions, without having to rely on banks or institutions to do the verification for you. In fact, blockchain does away with having to trust the verification process (or even your client) because its based on a decentralized system with consensus backed verification.
This consensus mechanism is how transactions are marked as valid. It also ensures that there is no double-spending (the possibility for one party to fraudulently re-use a transaction).
Therefore, the blockchain is a decentralized ledger that allows a peer-to-peer network to process transactions that are secured cryptographically using algorithms and consensus.
How does it work?
The system of blockchain tech isn’t a new one. In fact, it can be observed in our every day lives. Take for example, human biology. We all have DNA strands that make up our biological lives, which we then pass on to our offspring.
Now apply the knowledge of the blockchain being a data structure that appends information on to each block which, in turn, becomes immutably and permanently joined together. What you get is a system that contains instructions (or computer code) that is replicated over various other computers. This process is similar to DNA replicating in our cells. But this topic is the substance of a future article.
For the purpose of this explanation though, I’ve put together an infographic that simplifies how blockchain technology works below:
In an effort to keep this series on the blockchain short & relevant, I’ll end this article here.
Do keep an eye on our blog for my next article which will cover must-know blockchain terms.
In the meanwhile, if you have any questions for me- feel free to post them below!
Hey, I'm Kalyn. I hope you enjoyed reading this post.
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