My previous publications had the word “blockchain” repeated again and again. Not just in my publications but anywhere you go to quench your thirst for knowledge about Web 3.0, the most repeated word would be Blockchain. So what is it? Is it some sort of crypto or programming language? Let’s see.
Why:
In the current system of Web 2.0, our data is stored in a centralised database. Now let’s understand the term word by word:
Database: A storage unit that has data (details) of everything you wish to store. For example, a To-Do list is storage for your activities. The database is a technical term used by programmers worldwide to signify a sort of box/unit that stores data.
Centralised: Owned by a single authority
So, collectively a centralised database would mean Facebook, Google or other such giants who store your data and are the sole owner. Now the issue with this is that the admin can easily change the data in a database. But Web 3.0 didn’t come into existence just to resolve the issue of logging into your Insta ID. Currently, a lot of times we see the news of corruption, under-the-table transactions, black money etc… Somewhere, someone would be storing the data of such transactions but the problem with this data is that without the permission of the admin, we cannot even access our data and as mentioned earlier the admin can alter this data easily. Now this means that claiming what’s yours isn’t in your hands.
To resolve this issue of unreliability a system was needed that could give authority to the rightful owner rather than a single firm/organisation, a system the data of which couldn’t be hampered and a system that’s shared among others openly to ensure ownership and safety. Blockchain is that system.
History:
Blockchain came into existence in the 1990s (early research) but was implemented in 2009 when an anonymous developer - Satoshi Nakamoto developed bitcoin using blockchain. That’s how cryptocurrency was born.
What:
In simple terms consider a shop. There would be a ledger which has data of transactions, profits, losses, how much was sold, what was bought etc… Blockchain is nothing but this ledger whose each record is a block chained with another such block (a record) and hence forming a chain called Blockchain.
Now, blockchain, as explained, is a chain of blocks. This block has three things (a bird’s view perspective):
- Relevant Info (For example, transaction details would be stored in the blockchain of bitcoin. Transaction details as in address of buyer, seller, time of purchase etc…)
- A hash code (a long random code of numbers that is generated as per the information stored in the block - like a unique fingerprint)
- Hash code of the previous block
The very first block is called the Genesis Block - it doesn’t have hash of previous block
How is it safe?
As mentioned above, the contents of a single block of blockchain are Info, its hash, and a hash of the previous block. Now, hampering the information stored in any one block would alter the hash generated by that information. But the hash stored in the next block of this block remains unaltered which means an attempt to alter data was made unauthorized person. Added to this is the fact that this chain of blocks is shared among every node (every computer) that is present in the network. These nodes are rewarded in form of cryptocurrencies for providing their service in the network.
Now, a person can claim that he would change the hash of every block on a single chain. Changing the data of one block takes around 10 min in bitcoin and each chain has millions of blocks. So, all the best for his worst nightmare.
The concept of time comes from what’s called Proof of work. Proof of work means that you need to show that you have worked for 10 min (in bitcoin) to alter the data. Simply put, a complex mathematical proof needs to be generated as well as should be approved by every node present in the network to claim the validity of this change.
How did it help?
The widest implementation of blockchain is a cryptocurrency like Bitcoin. How did it help us? Well, bitcoin removed the reliance on banks. Earlier if I needed to transfer money from the USA to the UK, I needed to bear the exchange rates and even losses of other forms like fees charged by the bank. Bitcoin is different. 1 Bitcoin in the USA is 1 Bitcoin in India, 1 Bitcoin in the UK and worldwide. No exchange rates, middleman fees, minimum transfer cost etc…
Not just cryptocurrency, but real estate deals are also stored on the blockchain. This helps the owner as well as the seller to keep track of ownership and in case of any anomaly, it helps the rightful proprietor to claim the ownership without breaking a sweat.