It took me a while to get my head around what blockchain technology actually is.
I spent weeks reading and yet it still didn’t quite get it… Needless to say, I didn’t feel like Albert Einstein.
What did help, though, was a friend of mine explaining it with an analogy that I could relate to. So, if you’re struggling as well here’s how my bud broke it down to me so even I could understand it.
Hopefully this will clear it up for you as it did for me.
The Wikipedia Model
If you’re anything like me, you spent a disproportionate amount of your time at school/college cruising Wikipedia for answers to… Everything.
As a result, you probably have at least a vague understanding of how the site is run and maintained. In case you need a refresher, here you go:
· Random contributors can add information to Wikipedia
· Each of these users amend and update it over time – no one person controls it, per say
On the surface, that sounds pretty much just like what a blockchain can do: multiple people can make entries to a record of information and the network controls how it’s maintained.
While those two similarities are indeed shared, closer inspection shows where blockchain comes into a league of its own.
Both Wikipedia and the blockchain run on distributed networks – the internet. In Wiki’s case, however, it’s built on the World Wide Web using a client-server network architecture.
A client (aka a user) who has permissions that allow for changing entries on Wikipedia is stored on their main server.
When a user accesses the Wikipedia site, they get the most up-to-date version of the “master copy” stored there.
The database remains under the control of the Wikipedia admin team, who determine access and permissions for all the users.
This is the exact security model favoured by pretty much all the centralised databases of governments, banks and corporations right now. Because one owner controls the database’s access and maintains updates, it provides a decent level of security for the data against cyber-attacks.
Wiki’s master copy is held and edited on that one server and all users get “beamed” the newest version.
With blockchains, though, this database is structurally poles apart from Wikipedia’s. Every node in the blockchain’s network updates the record independently after coming to a unified conclusion about the accuracy of the newly added data.
Because every computer in the network has a copy of the database and every copy is confirmed as being the same, there’s no need for a master copy to be held in a central location.
This key difference is what is making everyone rave about blockchain tech…
This innovation means that from now on registering and distributing data no longer needs a middle man to handle the digital relationship.
The Key to Digital Trust
Satoshi Nakamoto’s main breakthrough was combining three technologies (the Internet, private key cryptography and a protocol for incentivising the people who maintain it) for a revolutionary way to enable peer-to-peer transactions between strangers, without the extra cost attached of a middleman.
This is because one can prove you are who you say you are (authentication) and prove that you should’ve been able to do what you tried to do (authorisation).
With blockchain technology, authentication is done by private key cryptography and authorisation – making sure the user has enough money, is broadcasting the right transaction type and so on – is handled by the distributed network.