If you’ve decided to read this article it means that you have some uncertainty regarding this whole contrivance or how it works? Well, today our guide will give a breakdown of blockchain down to the tiniest detail to give you a vivid understanding of this technology and how to get started with blockchain.
Get started with blockchain: definition
Let’s get on with a simple definition of the technology before we get started with blockchain. Blockchain is a decentralized distributed public ledger system. Now, it’s time for discussing and understanding a few important jargons of this technology.
The most discussed technical terms we come across while digging about blockchain are decentralized and distributed. To comprehend, what it means to be decentralized and distributed, let’s start with the status quo:
Centralization: Any organization of network where decisions regarding the organizations are made by a selected group of people is known as a centralized system.
Presently, we are surrounded by a mass of centralized systems which we use in our day-to-day lives, like ordering food, Booking a cab, reserving a table in a hotel. All these are executed and done with the help of a third party. This third-party has complete power on the rules and regulations of the system.
Even though these guys have a majority of the power they greatly rely on your trust to stay functional.
For example, we all keep our money in the bank instead of shoving it under our bed at home because we trust our bank more than our next-door neighbor. A decentralized system is exactly the opposite of a centralized system, it is when a service is ruled by no single governing authority. You are using a decentralized system right now that is the internet.
Nobody owns the internet and nobody is supervising what websites can or cannot do.
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What is a distributed system?
What has been the most common reason for a majority of the data breaches that took place in the past few years? Why these attacks were successful? Because these companies chose to keep all the data in one basket or in a single server which makes it very easy for a hacker to get into the system and steal the data.
In a distributed system the information is distributed to several locations thereby making it harder for a hacker to alter the data in all the places at once.
How Blockchain protects data?
Blockchain is distributed and decentralized. This means that whatever information is stored on a blockchain is distributed and the blockchain in itself is owned by no single governing body. So when you get started with blockchain, you can be assured your data is protected.
By distributing data to different locations a hacker would need to alter the data in all places at once to perform their sneaky activities. It feels weird but by opening up and giving the data to everyone you protect it, so what we see from breaking down the definition so far is that blockchain is some sort of a system which is owned by nobody, and has no single point of functionality and instead is distributed in nature.
What is a public ledger?
Now, let’s look at the other half of the definition which states that blockchain is a public ledger system. So first of all, let’s get our heads around this whole Ledger system a ledger is a list of anything, the term Ledger originates from banking as it was first coined to denote a list or a book containing Financial transactions.
Blockchain’s role in Bitcoin?
Satoshi Nakamoto introduced Bitcoin as a digital currency, it is not owned by the government but in essence, very much like fiat currency or some of you would call cash. So, in the sense that it could be spent anonymously, it could be hard to track, and it is easily trusted.
Now, the underlying Tech that powered Bitcoin was blockchain, so any transaction that was made using Bitcoin as a currency was registered on a list called a ledger, and this Ledger was then distributed to all the members that had agreed to participate in the network.
Everybody could essentially keep tabs on each other’s transactions and anybody trying to tamper with records would be easily identified due to the distributed nature of the system.
Checkout the following infographic developed by our friend karthik at acmarket.biz, on Blockchain in the mobile application market.