What’s all the fuss over the skyrocketing prices for BTCs that jump up and down every day? Why do more and more people wish they had just one BTC? Why are companies which mention blockchain in their business agenda suddenly worth 400% more than they used to be? Some think the crypto world is a new mystery that we need to solve in order to have a better future; some are afraid that the ‘bubble’ will burst, and some simply think it is just the next worldwide scam. Here, Hacken will try to explain what blockchain is in layman’s terms.
Imagine yourself at an amusement park where everyone gets a tape recorder at the entrance which automatically records the entire day at the park. Imagine that in order to go on a roller coaster or buy food you need tokens, but there is no place to get them. Suddenly you hear the vendor shouting, “Jimmy gave 7 tokens to Dan!”, “Olivier gave 150 tokens to Sarah!” Once someone exchanges money for tokens and makes a purchase, the vendor yells, and each recorder makes a record of it. When you decide to use your tokens finally, the vendor will compare them with the tape recordings to make sure you have not come up with a few “extra” tokens. This key procedure protects the park from scams. No one actually owns physical tokens, because they are useless as physical objects since every park visitor can show the history of all the transactions.
In this case, the film of any tape recorder works as blockchain. Of course, if such an amusement park existed, it would take too much time for vendors to compare all the recordings. However, in the digital blockchain, everything is much less complicated high-speeded internet allows blockchain to process big chunks of data very fast. Thus, the main benefit of blockchain technology is decentralization. Everyone keeps the duplicates of all transactions and, as a result, no one is able to fool another, neither the park owner nor its vendors. To make a long story short, in real blockchain you only have the key from a “previous” transaction which indicates where you got your “tokens” from and how many of them. A private key is the only proof that you own your tokens. Therefore, if you lose your key, you lose your tokens as well, and no one else would be able to use them.
Let’s recall one more time the vendor from the amusement park who was comparing tape recordings for authenticity. This task is performed by the miner’s computers in digital blockchain technologies. You probably already wonder who those miners are. In order to get an idea of what we are talking about, imagine five bartenders competing with each other to be the first to make a smoothie. Their task is only to press buttons on a blender. They are not responsible for choosing the ingredients. The one who first mixes all the fruits properly wins. Hence, a barman who has the most powerful mixer will be able to satisfy the guests first. At the same time, it will be impossible to change the ingredients without anyone noticing it, as the guests and other barmen would realize pretty soon that something was off. Miners are special participants of the blockchain system, whose computers are programmed to check the token transfers of others. As a reward, they are provided with new tokens, so-called PoW emission mechanism.
A glass of smoothie is a block in the blockchain. Pieces of the ingredients are transfers, and each has its own identification number. The process of putting together those numbers into one block is called ‘hashing’. All the miners are mixing the numbers of transactions in order to get the ‘hash’ of the block — the taste of the smoothie in our case. The first miner to get it correctly adds a new block. It is for this reason so many people are attracted to blockchain: the more participants, the higher the security.
The most important thing about blockchain is that all the information inside it can be transferred directly and at any distance, without the need for a centralized institution to control it. All transactions are recorded, there is no paperwork, thus, the level of bureaucracy would be almost zero as well as the chance of forging documents. Many countries, including Sweden, Georgia, Ghana, and Honduras have already implemented blockchain technologies into the real estate sector. As such, blockchain has become a sure way for countries to modernize their governmental system, getting them one step closer to the future.
Thus, as of now, the most important thing is to spread the word about this new innovative technology and not to be afraid to use it. It is as simple as making a smoothie, isn’t it?!
At Hacken, we take security extremely seriously, and all the checks are performed according to the highest standards. If you have any questions about the topic or need a consultation on cybersecurity in blockchain and IT, feel free to contact our Team!
Enter your email address to subscribe to Hacken Reseach and receive notifications of new posts by email.