Blockchains: secure databases by design.
Satoshi Nakamoto was the first user of this concept in bitcoin currency in 2009. By using a blockchain system, bitcoin was the first digital currency to solve the double spending problem without the use of an authoritative body or central server (unlike physical coins or tokens, electronic files can be duplicated and spent twice).
Private Blockchains
Adam, Bill and 50$ to bet can help you to understand!
Adam and Bill bet about tomorrow’s weather. The two of them of course have different opinion, Adam thinks for a sunny day and Bill for a rainy one.
Adam and Bill are friends so they don’t need to spend for a legal contract to ensure the winner, so the money. They trust each other.
But if Adam and Bill were like customer and vendor, they will need a warranty to their “transaction”, a neutral third part that didn’t run away with the money.
And what is more neutral than a line of code?
How can this work safely?
Blockchain allows to write a few lines of code, a program running on the blockchain, to which Adam and Bill send their $50. This program will keep the $100 safe and check tomorrow’s weather automatically on several data sources. Sunny or rainy, it will automatically transfer the whole amount to the winner. Each party can check the contract logic, and once it’s running on the blockchain it can’t be changed or stopped. This may be too much effort for a $50 bet, but imagine selling a house or a company.
Public Blockchains
Blockchain networks have one or more functionalities. Bitcoin is a digital currency and a payment system. Its tamper-proof blocks hold ledger of all transactions. The people who sacrifice their computers are called miners. They get rewarded in bitcoins .
Ethereum has an additional functionality. It can host your code. Developing a blockchain from scratch and building your own community would be very difficult (Remember people has to sacrifice their computers for you?) . Ethereum takes care of the heavy lifting. You need to pay a fee depending on the computational costs.
Blockchain apps don’t have to be just payments systems or cryptocurrencies. It could be anything, like a social network, a learning platform like LiveEdu, etc.
Let’s read with more technical words
A blockchain is a ledger of facts, replicated across several computers assembled in a peer-to-peer network. Members of the network are anonymous individuals called nodes. All communication inside the network takes advantage of cryptography to securely identify the sender and the receiver. When a node wants to add a fact to the ledger, a consensus forms in the network to determine where this fact should appear in the ledger; this consensus is called a block.
The blockchain is an innovation relying on three concepts:
- peer-to-peer networks
- public-key cryptography
- distributed consensus based on the resolution of a random mathematical challenge
None of there concepts are new. It’s their combination that allows a breakthrough in computing.
Links
Interested? Here what I surfed to write this above..
https://hackernoon.com/a-beginners-guide-to-blockchain-d04266844e7
https://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=XIM12354USEN
https://marmelab.com/blog/2016/04/28/blockchain-for-web-developers-the-theory.html
Giulia Scalaberni 