Blockchain this, Blockchain that

4 min readApr 24, 2024

Intro

Blockchain illustration (generated by Gemini)

Did you realize that people nowadays are talking about blockchain this and blockchain that and you are wondering what is that thing? How does it work? And what is an example of it?

Well, you are not alone. To help you understand what is blockchain, I’ll try to explain it easily so hopefully you can understand it easily as well.

Definition

Referring to Investopedia, blockchain is a distributed database or ledger shared among a computer network’s nodes. Cryptocurrency system is one of the examples that runs on this technology where cryptocurrency uses blockchain for maintaining a secure and decentralized record of transactions.

Illustration

For illustration let’s dive into a real-life case.

Let’s say there’s a group of people consisting of Abe, Ben & Clark who just bought a book for each of them. The price of a book is $1.

Because the store has a lot of queues, Abe paid 3 books for each of them which makes Ben and Clark owe Abe $1 each.

Now let’s assume Abe has $4, Ben has $2 & Clark has $3 in their account.

1st transaction by Ben sending $1 to Abe

For the first transaction, Ben sends $1 to Abe. This is where the blockchain doing its jam.
The transaction records were recorded in a new block permanently. The block also holds the information on their account balance. We can see, previously Abe had $4, Ben had $2 & Clark had $3. Now Abe has $5, Ben has $1, and no change from Clark.

Here you go, we are almost there. Now take a deep breath because we are going to dive deeper. :D

2nd transaction by Clark sending $1 to Abe

Now it’s Clark’s turn to send $1 to Abe. When he does the transaction, a new block is created and inscribed the transaction alongside the current balance of each account.
There are two blocks created from those transactions. Those blocks are linked to each other. Each of them took the reference from the previous one for the number of balances each person (Abe, Ben, Clark) owns.

The chain of records is called a Ledger. The ledger is also shared among the person (Abe, Ben, Clark) as a Public Distributed Ledger.

Ledger shared to each person as Public Distributed Ledger

Perfect! I believe you are 2/10 people left :))).

Anyway, let’s continue!

Benefit of Blockchain

From the previous part, we should’ve understood what is blockchain and how it works.

So, blockchain is about keeping the transaction and account balance record in a block?

Well, blockchain has other key benefits:

Security: stored information on a blockchain is highly resistant to hacking or tampering.
Transparency: the information of the blockchain has visibility to everyone.
Efficiency: blockchains can streamline processes by eliminating the need for intermediaries.

I won’t explain all of those key benefits in this post as I want to keep it simple. However, let me explain it in one example:

Example

From the previous illustration, Abe has $6, Ben has $1 & Clark has $2.
Let’s say Ben wants to transfer $2 to Abe because he has another split bill where Ben needs to pay Abe $2.

Each friend flag the transaction as invalid

Since each of them has the ledger and in that ledger, Ben has only $1 left on his account, Abe & Clark flag that transaction as invalid.

What about Hacker?

It’s not that easy, the hacker won’t be able to alter any data in the blockchain because each user has a copy of the ledger.

All data within the block are encrypted by complex algorithms.

Unless the hacker can hack all of the ledgers around the world. Well, good luck with that.

Conclusion

Blockchain is a collection of records.
Blockchain is linked with each other and shared among users as Public Distributed Ledgers.
Blockchain has great security defense because its data is protected by complex algorithms.