The Blockchain

What Is "The Blockchain"?

Don't be alarmed by the technical jargon used to define "blockchain." A blockchain is nothing more than a database. It's also not a particularly complicated one; you could make it with minimum effort in a spreadsheet.

There are a few quirks to these databases. The first is that blockchains are only capable of appending data. That means you can only add information - you can't merely click on a cell and erase or edit whatever you've previously entered.

The second is that each database entry (called a block) is cryptographically connected to the previous entry. In layman's terms, each new entry must include a digital fingerprint (hash) of the previous one.

That's all there is to it! You end up with a chain of blocks since each fingerprint refers back to the previous one. A blockchain, as the cool kids like to call it.

A blockchain is immutable, which means that if you modify a block, the fingerprint changes as well. Because that fingerprint is contained in the following block, the following block is also altered. And since the fingerprint of that block is... well, you get the point. As a result, every change becomes apparent in a domino effect. You can't change anything without causing everyone to notice.

Is that it?

Underwhelmed? That's reasonable. The innovation here isn't some clumsy Google Sheets replacement. It's the fact that everyone on the network may download blocks from others to create identical copies of the blockchain on their machines. That's exactly what the program we talked about previously accomplishes.

Assume you're using the program with your buddies Alice, Bob, Carol, and Dan. "I'd want to transfer five coins to Bob," you may remark. So you transmit that command to everyone else, but the coins aren't delivered to Bob right away.

Carol may elect to gift Alice five coins at the same moment. She also broadcasts her instructions to the whole network. A participant can assemble the pending instructions to form a block at any moment.

If anyone can make a block... what stops them from cheating?

Creating a block that reads "Bob gives me a million coins" is undoubtedly highly appealing to you. Alternatively, you may start buying Lamborghinis and fur jackets from Carol using funds you don't have.

That isn't how it works. The system prohibits you from spending cash you shouldn't be allowed to spend thanks to encryption, game theory, and a consensus mechanism.