How do you explain the blockchain to normal people?

in blockchain •  7 years ago 

Let me try to explain this without much technical terms.

Let’s say there are 5 people sitting in a room each having a blank A4 paper and a pen. Now lets say person A sends $10 to person B. Each of these 5 people will note the transaction in their papers. Now assume A is a close friend to one of the people sitting with the paper and ask her friend to reverse her transaction meaning write another entry with B sending $10 back to A. Since A was only friend to one of the person there would be 4 copies with only 1 transaction and 1 copy with 2 transaction. So true transaction is assumed with the maximum number of copies hence A cannot cheat the system unless she is friend with 3/5 people with the papers. That’s called 51% attack.

Transaction entry/validity:
Imagine the same transaction with 50,000 people holding the piece of paper noting all the transaction it would become impossible for A to be friend with 25,000 people. This is called a decentralised system since no individual holds the power to cheat the system. In a centralised system this job is done by banks as they keep the accounting of all the transactions and hence bank holds the power to change the transaction as well.

Block and Mining:
Now since there is a limited space in a A4 paper lets assume you can only write 50 lines of text or for simplicity 50 transactions in one single paper. And each of these paper have a id which is same for all the 5 papers since they represent the same transactions or are just copy of each others. This one single paper is called a block. Now in real world there is not only A and B doing the transaction but 1000s of people doing transactions between one another. So obviously each person will run out of space to note the 51st transaction and would need a new paper/block. There is a bundle of the next empty papers with a different paper id is hidden somewhere and everyone tries to find it and whoever finds it first distribute to everyone else. And the person who finds it gets $1 for her work. This is called mining.

Immutability:
Now everyone else starts noting the transaction in the new paper. The id of the new paper is linked to the id of the previous paper in such a way that if someone tries to change a transaction in paper1 she won’t be able to get paper2. Hence once a transaction is written in a paper it can not be changed. This is called the immutability of records/transaction. In case of a centralised system like bank banks has the power to change any past transaction.

Blockchain:
As i mentioned the id of paper2 is linked to the id of paper1 and all the transactions in paper1 in such a way that if you try to change even a single transaction your paper2 will be out of sync with other’s paper2 and since more than 51% people would have a different copy of paper2 than you, your paper2 will be nullified. Hence all the papers/blocks are linked to their previous paper/block in chain form of way. This is why it is called Blockchain.

In summary blockchain is enabling people to transact/trade with each other without the need of a 3rd party like a bank. The transactions cannot be changed/reversed once done and no one has the power to cheat the system.

This is blockchain in a non technical term. If you want to understand it in detail feel free to ask me.

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