Blockchain has the potential to change the way that the world approaches big data, with enhanced security and data quality. Most of the people know nothing about how Blockchain technology works. For this very reason, I decided to give a gentle introduction to Blockchain technology.
Before describing Blockchain First, We will discuss the problem that Blockchain solved.
Suppose, Your friend say Alex calls you and say “Hey, I need some money”. You replied “Yeah Sure!! Sending $5000 to your account” and hung up.
You then call to your Account Manager and tell “Transfer the money to Alex account”. He replied “Sure Sir!”.
He checks the register whether you have enough balance or not as you have plenty of money. He creates an entry into the Register :-
JAN 9, 2018 2:00 PM You------------------------------------------------Alex $5000
You then call Alex and Tell “You can go and withdraw $5000 as I have transferred”
Now, in this scenario what Happened is You and Alex trusted the third-party that is, the BANK. Instead of any real movement of money you trusted the register that maintains the entry that neither you nor Alex owns 😬
This is the main problem now-a-days that we depends on the third party. Now the question arises, What is the Problem here if we are depending on Third Party?
The problem is :-
- What if the Account manager wrote $7000 instead of $5000 by mistake?
- What if the register that maintains your entry being lost or destroyed?
So, Is there any way we can transfer the money without any intermediary or Is there any way we all can maintain the record among ourselves without trusting any other for it?
You guessed it write it’s BLOCKCHAIN!!
“Blockchain is a method to maintain that register among ourselves instead of depending on someone else to do it for us.”
But How it exactly works?? Lets understand the process in a layman language.🙃
Lets take an Example, Suppose 10 people would not like to depend on third party and Upon mutual agreement, they have details of each other’s accounts all the time — without knowing the other’s identity
Everyone keeps an empty folder with themselves and whenever they keep on adding the pages to that empty folder that will contain record for the transactions.
- Now, #3 wants to send money $400 to #6.
- To make the transaction, #3 shouts and tells everyone, “I want to transfer $400 to #6. So, everyone, please make a note of it on your pages.”
- Everyone checks whether #3 has enough balance to transfer and if (s)he has, everyone make a note on their pages for the transaction.
JAN 10, 2018 10:00 AM #3------------------------------------------------#6 $400
- This exercise continues until everyone runs out of space on the current page. Assuming a page has space to record ten transactions, as soon as the tenth transaction is made, everybody runs out of the space. Put the page in folder and bring out the new one.
- Before keeping the page in folder it must be sealed with a unique key agreed by everyone in the network. By sealing it, we will make sure that no one can make any changes to it once its copies have been put away in everyone’s folder.Once in the folder, it will always stay in the folder — sealed.
- Everyone calculate the sealing number for the page so that it can be tucked away in the folder. Everyone in the network does the calculation. The first one in the network to figure out the sealing number announces it to everyone else.
- After hearing the sealing number everyone verifies whether they obtain the correct output or not. If it does, everyone labels their pages with this number and put it away in their folders.
But what if #4 doesn’t have the same sealing number that was announced in the network. Reasons for that could be :-
- #4 might have misheard the transactions when it was announced.
- #4 might have tried to be dishonest.
No matter what the reason is, #4 has only one choice — to discard his page and copy it from someone else so that he too can put it in the folder. Unless he doesn’t put his page in the folder, he cannot continue writing further transactions, thus, forbidding him to be part of the network.
The agreed upon number would be decided on the basis of majority. If the majority of the individuals in the network decides to turn dishonest and cheat the rest of the network, the protocol will fail its purpose. And that’s the only vulnerable reason why Blockchains might collapse. It is built on the assumption that the majority of a crowd is always honest.
That’s all about Blockchain. I hope you liked the blog…. 🙂
Happy Blogging & Stay Tuned !!
Reference : A Must read guide to Know about Blockchain. 🤘